THE cap on housing payments to meet 'bedroom tax' benefit cuts looks likely to be scrapped, Nick Clegg has hinted.

The Deputy Prime Minister said there would be an announcement soon which would allow councils to spend more cash on Discretionary Housing Payments.

Currently there is a limit on how much can be allocated to tenants, with the amount given by the Department for Work and Pensions only able to be topped up by another 150%.

This has still left councils across Scotland with a shortfall and even though the Scottish Government has pledged to give more cash, it can't be spent on DHP and another mechanism had to be found which involved giving the cash to landlords.

Mr Clegg, speaking at the Liberal Democrat Scottish Conference in Aberdeen, said: "There are some councils in Scotland who have run up to the limit of the funds they have available for DHP.

"There is this limit, a cap in effect, on what councils can use which I think needs to be addressed, and we will be making an announcement about that shortly.

"This is obviously a highly controversial policy, it is one we are keeping under review.

"It is one that I have insisted there are more funds available to deal with the hard cases. I am confirming there will be an announcement from the coalition Government in dealing with this issue of the cap that in effect prevents Scottish local councils from using the money as freely as they wish."

He said he would like to see changes to the 'bedroom tax', but blamed his Tory coalition partners for blocking them .

Mr Clegg said: "I actually strongly agree that of course a policy like this needs to be kept under constant review and should of course be amended and changed as things go along.

"There are some changes that we can deliver in this coalition Government and frankly there are some that the Liberal Democrats can't because of the Conservatives."

The Scottish Government has asked the UK Government to lift the DHP cap to allow it to fully mitigate the 'bedroom tax' in Scotland, but it has so far refused.

John Swinney, Finance Secretary, last year announced extra cash for councils up to the limit, which was around £20 million. Labour asked for more cash and for another method to be used to distribute the cash to help circumvent the cap on payments.

Mr Clegg's speech brings the possibility of the cap being abolished and money able to go to affected tenants a step closer.