The work and pensions secretary said “tough decisions’ had been made which would hit claimants – following reports that she told the cabinet their loss could reach £2,400 a year.
The admission comes just one day after the prime minister told the Commons that current claimants “will not see any reduction”, promising: “They will be protected.”
However, experts have long warned that the pledge to protect existing claimants excludes those deemed to have “changed circumstances”, including some disabled people, or with new homes.
Meanwhile, universal credit is far less generous than the tax credits system it replaces – which means new claimants will receive thousands less than they would have.
Asked about the controversy, Ms McVey continued to defend universal credit, insisting it was helping people into work and that 1 million disabled people would receive “significantly more”.
But, she admitted: “I’ve said we’ve made tough decisions – some people will be worse off.”
At the weekend, Ms McVey was reported to have alarmed cabinet colleagues by warning half of lone parents and about two thirds of working-age couples with children would lose the equivalent of £2,400 a year.
It prompted John Major to demand an urgent rethink to prevent a repeat of “the sort of problems that the Conservative Party ran into with the poll tax”.
Asked if the report was correct, Ms McVey told BBC News: “I won’t say what I said in cabinet.”
But she added: “What I will say is that had a very open conversation with my colleagues about how we support people.”
During prime minister’s questions on Wednesday, Ms May said: “In relation to those people who are being moved on to universal credit as part of managed migration, we are of course undertaking that.
“It will start later next year and will be done initially on a small-scale basis to ensure that we get that right.
“We are putting in transitional protections for those people so that people who are moved on to universal credit as part of the process will not see any reduction—they will be protected.”
Johnny Mercer, a rising Tory star, added his voice to calls for big changes to universal credit, or for it to be scrapped.
“Esther’s in a tough spot here. It’s not her fault; universal credit was designed so that no-one would be worse off,” the Plymouth MP tweeted.
“Stop the tax-free allowance rise and re-invest into UC, or I can’t support it. Not politically deliverable in Plymouth I’m afraid.”
The Independent has launched its #FinalSay campaign to demand that voters are given a voice on the final Brexit deal.