The controversial 'bedroom tax' could be scrapped if a Coalition-ordered review finds it is not saving any money, a Cabinet Minister has suggested.

Liberal Democrat Scottish Secretary Alistair Carmichael said ministers would not "carry on regardless" with the policy.

The wide-ranging review into the housing benefit cut is not expected to report until late 2015, after the next general election.

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The Department for Work and Pensions believes the bedroom tax will reduce the housing benefit bill by around £500 million a year.

But a recent report by the University of York suggests the DWP may have over-estimated the savings by as much as 40%.

Ministers have defended the policy saying it will help ease overcrowding and bring housing benefit for council tenants into line with the private rented sector.

Mr Carmichael also insisted that it was necessary as part of a package of measures to help reduce the deficit.

The Coalition-ordered review would look into how much money was saved by the policy, he indicated.

Pressed on the issue of savings in front of MPs on the Scottish Affairs Committee, he said: "If as occasionally happens with governments of all colours, that you implement a policy and it turns out that it does not achieve the savings that you wish then yes of course you are not going to carry on regardless. That is the whole point in having a review."

Asked by Labour MP Pamela Nash if he would support scrapping the policy if it turned out it was not saving money, he said: "Well, that's the whole point of having the review and we judge the review at the conclusion of it."

LibDem leader and Deputy Prime Minister Nick Clegg announced the review to MPs last month. At the time he said: "To be honest, lots of wildly different figures have been cited about the policy's impact. That is why we are commissioning independent research to understand its impact.

"I suspect that it varies enormously between one part of the country and another, and one local authority and another."

A consortium has been commissioned to carry out the review. While it is not due to report until 2015, initial findings are due to be available early next year.

The SNP has pledged to scrap the bedroom tax in an independent Scotland. Labour has also pledged to scrap the policy if it is elected in 2015.

Under the policy, council or housing association tenants who are deemed to have an extra bedroom have their housing benefit cut by 14%.

An SNP spokesman said: "Alistair Carmichael's suggestion that if a review shows the bedroom tax is not saving money it could be scrapped is enlightening. We know it is unfair - unworkable and detested and should be abolished in any case."