The government said cutting the payments for children outside Austria does not break the European Union’s rules on discrimination.

A coalition between the conservative People’s Party and the anti-immigration Freedom Party was formed last month, with conservative Sebastian Kurz leading the government.

Kurz said the government would cut the benefits for Austrian’s living in a country where the living costs are lower than in Austria.

He told reporters: “It is an unfairness built into the system that, for two children who do not even live in Austria but in Romania, roughly €300 a month are transferred to Romania and that is almost the average income there.”

Child benefit payments in Austria start around €114 a month for an only child. But the amount varies depending on the age and number of children. 

Kurz also said: “We will reach a decision in cabinet here so that child benefit payments are not made abroad to the same extent as before.”

He added that this could save the government more than €100m a year. 

The new coalition government has also said it would halt illegal immigration, cut taxes and introduce institutional reforms.

Austria’s economy is one of the strongest in Europe and the government plans to build on the country’s role as a bridge between Western and Eastern Europe.