MSPs should "rob Peter to pay Paul" to subsidise rents for those deemed to have extra bedrooms, according to trade union campaigners.
Holyrood should find more money from its fixed block grant to fund the shortfall in rent created by the UK Government's under-occupancy charge, No2BedroomTax campaigners told Holyrood's Welfare Reform Committee.
The policy, known by its opponents as the bedroom tax, deducts housing benefit from people deemed to have additional bedrooms and the Scottish Government has been pressed to extend its existing mitigation measures to fully fund the shortfall.
SNP MSPs repeatedly pressed campaigners to suggest where the extra money would come from and were told that the Scottish Parliament was created to protect people from "extreme" Tory governments.
Fully funding the cuts would send "a very powerful message" about the direction of Scotland's main political parties, potentially boosting the SNP's case for independence and Labour's hopes of winning the next UK general election, and demonstrating the power of devolution, according to campaigners.
Campaigners recognised that Holyrood faces "a difficult choice" and warned of more difficult choices ahead if the UK votes in a "hard-right government determined to destroy the welfare state", such as a Tory-Ukip coalition.
The No2BedroomTax campaign will support any party or constitutional model that protects tenants and abolishes the "bedroom tax", campaigners said.
Alan Wylie, who has petitioned Holyrood to fully mitigate the cuts, said: "I do accept that with financial mitigation there is an argument for robbing Peter to pay Paul.
"But I trust the Scottish Government to broach the subject in a common-sense manner.
"If they did find the money they would ensure it didn't come out of any other budgets, and if it did it would have little or no implications."
He added: "It's a political choice for you guys. If there is the political will for it to be done, then it will be done."
Jack Ferguson, Unite Scotland community co-ordinator for the No2BedroomTax campaign, said: "This money needs to come from somewhere as it is recognised on a state level that people in poverty can't afford to pay.
"This is exactly why people wanted a Scottish Parliament, because they knew Tory governments down the line would take extreme measures that people would want protection from.
"Now we're facing social chaos caused by this policy.
"We appreciate that it puts the Scottish Government in a difficult position but this is a level of emergency that you need to find a priority for."
He added: "If the next UK general election comes out with another Conservative government, or a Conservative-Ukip government, then I wouldn't envy your position here in the parliament.
"It's going to be very, very difficult if we continue in the direction of travel of the destruction of the welfare state, then we are going to see disastrous social chaos and harm resulting from it.
"It's going to have massive costs to every aspect of government and everything the parliament does if we come to a position where we are facing another hard-right government determined to destroy the welfare state.
"But the flip side of that is taking this action today, and effectively getting rid of the bedroom tax in Scotland, sends a very powerful message about the intention of the parliament and how it reacts to people's aspirations."
Meanwhile, Scottish housing minister Margaret Burgess was at Westminster today to demand clarification over how many people in Scotland may have been wrongly hit by the "bedroom tax".
Ms Burgess met with Lord Freud, the UK Government's Minister for Welfare Reform, today after it emerged that thousands of social housing tenants in the UK are in line for a "bedroom tax" rebate.
A loophole in the Westminster Government's welfare reforms means that what UK ministers call the spare-room subsidy does not apply to certain renters who have lived in the same home for more than 17 years.
Housing experts reportedly said that 40,000 UK claimants could be affected but the Department of Work and Pensions (DWP) stressed that it believes a maximum of 5,000 tenants are likely to have been caught up.