A move to axe housing benefit for jobless 18-21 year-olds - which was postponed because of fierce opposition - will go ahead next month.
The Government has been branded "shameful" and "heartless" towards young people who are old enough to fight for their country but not to receive help with housing costs.
Former chancellor George Osborne announced controversial plans in his 2015 Budget to force young unemployed people to live with their parents or pay their own rent.
The move was put on hold after a backlash, but the Government has now tabled proposals which mean jobless under-22s will no longer qualify for help with their rent.
The Department for Work and Pensions estimates that the change, which will now be debated by MPs, will affect about 11,000 young people and cut £105m from the benefits bill by 2020.
Although there will be exemptions and the change will only affect claims for Universal Credit made after April, Labour says it could mean thousands of young people sleeping rough.
According to Labour, the change contradicts the Government's pledges on tackling homelessness and Theresa May's promise to build "a country that works for everyone".
Some MPs are also angry because Work and Pensions Secretary Damian Green laid the new regulations before Parliament late on a Friday afternoon when the House was not sitting.
"This disgraceful cut to housing support will leave thousands of young people with nowhere to go," said shadow housing minister John Healey.
"Many could end up on the streets.
"These young people are old enough to fight for their country, but in Theresa May's Britain not old enough to get the same help with housing costs as everyone else."
Lib Dem leader Tim Farron added: "These cuts are an utter disgrace. Many of our most vulnerable young people rely on housing benefit for a roof over their head, especially if they have no family to turn to."
Among the exemptions are cases where the DWP judges it is inappropriate for individuals to live with their parents due to a threat of domestic violence.
Nor will the policy apply to those with dependent children, care leavers, those in temporary accommodation or young people who have been working for the previous six months.
But the exemptions are inadequate, according to charities and landlords. Shelter, Crisis and Centrepoint have campaigned against the removal of what they call an "essential safety net".
Richard Lambert, chief executive officer of the National Landlords Association, said: "The Government has effectively closed the door to private rented housing for some of the most vulnerable individuals in society.
"Never mind the nuances, all landlords will hear is that 18-21 year olds are no longer entitled to housing benefit.
"Faced with a young person who may not be able to pay the rent, a landlord won't worry about the details of their life, they just won't consider them as a tenant."
But a DWP spokesman emphasised that current claimants would not be affected and that the exemptions would make a difference to key groups.
"We want to make sure that 18 to 21-year-olds do not slip straight into a life on benefits, which is why we are helping young people get the training, skills and experience they need to move into a job and build a career," he said.
"This Government is delivering on its commitment to ensure young people in the benefit system face the same choices as young people who work but may not be able to afford to leave home."
The Government says vulnerable people will continue to be protected, as will carers, families and those who have been in work for at least six months prior to claiming will be exempt, and those working at least 16 hours at the National Minimum Wage.