A new wave of voluntary social services should be encouraged to take over responsibility from government for the worst-off members of society, David Cameron says.

The Tory leader warned Conservative right-wingers that it would cause 20 years of "misery" to cut benefits for Britain's most needy citizens. But he called for a new system of independent bodies run by local communities to replace government-run services.

Mr Cameron used a speech in Birmingham to praise the work of "social enterprises" and called for the creation of "social enterprise zones", areas where voluntary community groups would get government support. He attacked the clash between the "old left and old right" for concentrating on state services while ignoring the need for new locally-run organisations. He said: "Instead of expanding the supply of state services as the old left wants, I believe we should strive to expand the supply of social services, services provided by society itself. Rather than cutting the supply of state services as the old right wants, I believe we should strive to cut the demand for them; reduce the number of people who rely on the state rather than simply reducing the services they receive."

He warned: "The fact is, we cannot arbitrarily withdraw welfare benefits for the most needy of our fellow citizens. Yes, if we did that, no doubt in 20 years' time people would have become more self-reliant, but think of the misery of those 20 years. Some people will always need help and support, and we should not imagine that government simply withdrawing them from the social field will automatically and instantly cause new, independent bodies to spring up in their place.

"What we need to do is reduce the size of government, from below, as people progress from dependence to independence, not from above by a brutal and instant reduction in spending.

"The mistake both the old left and the old right make is that they ... concentrate on government, not the people.The fact that they say opposite things, one that we should expand the state the other that we should shrink it, is irrelevant. They're both talking about the state."