A rule that removes benefits from families whose disabled children are forced to spend long periods in hospital is to be scrapped by the Scottish Government.

The UK government’s so-called ‘84-day rule’ prevents families with a seriously ill or disabled child from receiving Disability Living Allowance (DLA) and Carer’s Allowance payments once they have been in hospital or received medical treatment for the same condition for more than 84 days.

The change will come into force once the powers are passed to the Scottish Parliament, and means families whose children are seriously ill will continue to receive DLA. It will also mean that the child’s family can continue to receive Carer’s Allowance.

At present the Department for Work and Pensions (DWP) suspends DLA payments once a child has been in hospital for more than 84 days. Carer’s Allowance is also affected, as it is presumed that hospital staff, rather than the family, have taken over caring responsibilities.

The SNP has argued that the rule does not take into account the financial burden parents face as they incur costs through daily hospital visits and that parents can also lose income because they are often not able to hold down a job as well as providing round-the-clock care.

Social justice secretary Alex Neil said the policy resulted in a “horrendous experience” for the families of some disabled children, adding that ministers were taking action “as a matter of principle”.

Mr Neil said: “It is an absolute disgrace that a family already going through the distress and pain of visiting their seriously ill child in hospital every day should be financially penalised.

“This will not affect many families but for those that it does affect, it is a horrendous experience and the Scottish Government is taking action as a matter of principle.

“We refuse to take an approach that punishes the vulnerable in our society which is why we will abolish the 84-day rule as soon as these powers are passed to the Scottish Parliament.

“These new powers mean parents who face higher living costs due to their child’s illness or disability, and are unable to work due to their caring responsibilities, will not be penalised when their child goes into hospital or has necessary medical treatment. Those families, who are visiting their children in hospital day in and day out, will no longer face financial discrimination and will continue to receive DLA and Carer’s Allowance.

“Abolishing the 84-day rule is an early signal that we will take a fairer approach to social security and that we are committed to developing disability and carer benefits more suited to Scotland’s needs.”

SallyAnn Kelly, chief executive at children’s charity Aberlour, said: “We’re delighted by this news. Since the DLA was first established, this loophole has created real anxiety in families with profoundly disabled children.

“When it was designed there was an assumption by officials at the DWP, that when disabled children go into hospital for 84 days or more, caring responsibilities would pass to clinicians and, as such, that child’s DLA could be suspended.

“Many families with a seriously disabled child will tell you that if anything, during long hospital stays, those responsibilities increase because hospital staff do not have capacity to provide round the clock and specialised care. At the same time, daily trips to hospital to assist in the care of their child can seriously impact on a parent’s ability to generate income through home based or part time work.

“Whilst this only affects a few families every year, it has the potential to have a really negative impact on any family in this position and as such is a source of great anxiety. We’ve been campaigning to stop this for many years and warmly welcome this progressive step by the Scottish Government.”