Lib Dems are calling for changes to the benefit cut for people judged to have bedrooms they do not need.
The changes, called the "bedroom tax" by critics but described by ministers as the removal of a "spare room subsidy", were introduced last year in England, Scotland and Wales.
Chief Secretary to the Treasury Danny Alexander said his party will make the case for "fairer rules" immediately.
Downing Street said the Conservatives were committed to the reforms.
He added that the Lib Dems "have never demanded the abolition of the spare room subsidy in private and have campaigned for it in public".
Labour accused the Lib Dems, who had supported the change, of "hypocrisy".
And a senior Conservative source told BBC political correspondent Chris Mason it was a "cynical PR stunt".
'Fairer rules'The changes have meant a cut to the housing benefit paid to eligible council tenants and those who rent from housing associations who were judged to have bedrooms that they did not need.
If tenants are deemed to have one spare room, the amount of rent eligible for housing benefit is cut by 14%. Those with two or more spare bedrooms have reductions of 25%.
Writing in the Daily Mirror, Mr Alexander said the government's benefits were working. But he said that not enough people had downsized, adding: "It's time to change our approach in this particular area."
Mr Alexander proposed that nobody should face a cut in state help if there was no suitable smaller property available, and that disabled claimants should be exempt.
New tenants in the social rented sector should still be subject to the changes, he said, but existing tenants would only be penalised if they were offered a "suitable smaller home and, crucially, turn it down".
New analysisMr Alexander said the Lib Dems would "make the case for these new fairer rules" immediately, adding: "If we cannot convince our Conservative coalition partners, we will commit to these reforms in the our 2015 Liberal Democrat manifesto."
A senior Liberal Democrat source told Chris Mason the party could not be precise at this stage about how much their proposed change would cost, but it is thought it would be around a few hundred million pounds.
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Norman Lamb MP: "Should you not be willing to review your position in light of evidence and experience?"
The party pointed to an analysis published earlier this month for the Department for Work and Pensions which suggested that one in 20 of those affected by the cut had managed to move house within the first six months of the policy.
In his article, Mr Alexander said there was a problem of social housing which is under-occupied, while others are on a waiting list for such housing.
He said the reform was made "with the best of intentions" but added: "We have always said that we'd be guided by the evidence and now we have it."
'Unbelievable hypocrisy'Ministers say private sector renters do not get spare rooms for free, and argue the policy will save around £500m a year. But critics say it is forcing households into arrears.
A Downing Street spokesman said: "Bringing the bloated Housing Benefit bill under control is a key part of our long term pan to fix welfare.
"Our reforms are working - and it's imperative we stick to them. The Conservatives are committed to this."
Rachel Reeves, Labour's shadow work and pensions secretary, said: "This is unbelievable hypocrisy from Nick Clegg.
"The Lib Dems voted for the bedroom tax. There wouldn't be a bedroom tax if it wasn't for the Lib Dems. And in February when Labour tabled a bill to scrap the bedroom tax, the Lib Dems were nowhere to be seen."
The Labour Peer, Lady Joan Bakewell, told BBC News the policy was a "dead parrot" because "it hasn't worked".
But the Lib Dem Care Minister, Norman Lamb, defended the shift in the party's stance.
He told BBC Newsnight: "Should you not be willing to review your position in the light of evidence and experience? It seems to me that the evidence is clear."
He said it was "perfectly reasonable" for the rules in the private rental sector to apply to social housing.
But he added: "The difficulty we have here, is people who are in social housing, who have a spare room, but are simply not able to move because of their circumstances."
Have you been affected by changes to housing benefit? What do you think of the Lib Dem proposals? You can share your views and experiences by emailing us at haveyoursay@bbc.co.uk using the subject line "housing benefit".
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