Motability is introducing a £25,000 price cap on cars offered through the charity fleet to stem some of the reported abuse of its scheme.
It follows pressure from the Department of Work and Pensions plus recent headlines which highlighted how some recipients of the £205 monthly Mobility Living Allowance had been able to add their own funds to acquire prestige brand cars with list prices of up to £37,000.
Lord Sterling, chairman of the £1.5bn Government-assisted Motability scheme, has announced the changes in an attempt to reduce its costs and cut abuse.
Rules which allow a MLA recipient to lease a Motability car and give it to a nominated driver are also being tightened up, with the driver now required to live within five miles of the recipient.
Sterling said last year there had been 7,144 allegations of fraud, many of which were investigated by police. The charity took action in 2,139 cases, leading to 829 cars being withdrawn.
Sterling said 95% of Motability cars cost £25,000 or less, with the average actually £19,500.
Motability is the largest single fleet operator in the UK, and is a useful channel of new car registrations for many manufacturers. It has 575,000 beneficiaries, up from some 200,000 barely a decade ago.
It also operates MFL Direct, an online arm for remarketing its cars on de-fleet.