The Government's welfare working group has hit back at a claim by Children's Commissioner John Angus that its proposals would "penalise the children for the sins of the parents".

Dr Angus, whose term as commissioner ends in the new year, said in a statement yesterday he was "uneasy" about a working group proposal to tie sole parents' benefits to their children's health and school attendance.

"This seems to be penalising the children for the sins of the parents," he said.

He also criticised extreme options in the group's report last week that would mean work-testing sole parents with children aged as young as a year, or from birth for mothers who have more children while on the benefit.

"I have concerns about the options that would reduce benefit levels or take other punitive measures for women who have another child while on a benefit. I cannot see how this would lead to good outcomes for any children in such a family," he said.

But the economist who chairs the working group, Paula Rebstock, said the proposals would not punish children.

She said Australia had made benefits conditional on children's health and school attendance in the Aboriginal community but did not cut the benefits.

"You don't actually remove the income but someone else manages it until those things happen," she said.

"This is really about looking at a pretty small group of people for whom this would be relevant. Where it is, it could be very important. The working group has heard that if you have any sort of issue with drug and alcohol dependence, this can be a big problem, and if you want to really look after the children you want to find a way to ensure that the money that is meant for them is actually used for them."

The group's report was actually lukewarm on cutting benefits for sole mothers who had more children after going on the benefit, noting that in the United States this policy "shows some impact in the way of lower non-marital birth rates but only for some sub-groups of mothers".

It acknowledged that work-testing mothers with babies under age 1 "may raise concerns about the impact on children".

The group did not endorse any of the 96 reform options it put up in its 125-page report and the Government has also said little about them yet. Social Development Minister Paula Bennett declined to comment on Dr Angus's statement yesterday.

But Ms Rebstock noted that an OECD report last week recommended "harmonising" unemployment and sickness and disability benefits, work-testing all beneficiaries rather than exempting whole categories of people such as the sick and sole parents.

The Government has already legislated to work-test sole parents when their youngest children turn 6.

The working group's report put up options to lower that age to 3, in line with the policy of 20 hours "free" childcare, or to 1, in line with the law keeping a new mother's job open for 12 months.