"The government needs to take a step back and remember for a second that we are talking about people - people who have escaped war and risked death by travelling the long treacherous journey to Australia."
The procedural changes to the Status Resolution Support Service program - announced at the end of last year - are expected to take effect from Sunday.
The allowance it provides to asylum seekers awaiting the confirmation of their refugee status in Australia is about 89 per cent of Newstart payments, or $247 a week.
But a spokeswoman for the Department of Home Affairs said the SRSS was not a social welfare program.
"It is designed to provide support for certain non-citizens who are in the Australian community temporarily while their immigration status is being determined," she told AAP in a statement.
"Individuals on a bridging visa with work rights and who have the capacity to work are expected to support themselves while their immigration status is being resolved."
The eligibility of SRSS recipients is regularly reviewed.
Department staff reportedly verbally told non-government organisations contracted to deliver the SRSS that eligibility changes would be made to wind back benefits.
Australian Council of Social Service CEO Dr Cassandra Goldie claimed parents affected were skipping meals to provide food and medicine for their families.
"It is appalling the government is wanting to cut people off income support entirely," she said.
"People will become homeless, their health will suffer and they will be unable to feed themselves."
An estimated 12,000 people living in the community receive the payments while their claims for asylum are determined.