The cuts, which are laid out in a report set to be handed to the prime minister this week, are needed to try to chop down the €2.6 billion debt held by the families section of France’s social security system.
The ‘Fragonard’ report produced by the Family High Council (Haute Conseil de la Famille) and named after its author Bertrand Fragonard, comes after President François Hollande rejected earlier claims that the government was to tax the allowances during last week's TV address to the nation.
The report, details of which were published in France’s Les Echos newspaper on Tuesday, suggests wealthier families would receive decreased allowances on a sliding scale based on their income.
"All families would retain the right to claim family allowances, but the amount would decrease according to their income," the report spells out.
According to Les Echos, the report suggests reducing grants by three quarters for the most well off.
The key question of a reform that will no doubt spark controversy over the coming months, will be at what income level the cuts will come into play. This, according to the authors of the report, all depends on how much the government wishes or needs to save each year.
If the government decides to save the more modest amount of €450 million a year, the income boundary would be set at €7,296 a month for a couple with two children, Europe 1 reported.
Those who earn any more than that would receive only a portion of the allowance, with couples earning €10,215 or more each month only receiving a quarter of the allowance – the minimum grant.
Some socialist deputies want to go further however. In an interview with Les Echos last month Gerard Bapt, the deputy for Haute Garonne said the income limit for couples with two children should be set at €4,416 a month.
Households earning more should only be eligible for half the allowance.
According to Bapt, this would save the government €1 billion a year, but the Haute Conseil fears this would have a severe impact on France's middle class.
A recent Ifop survey published in the weekly Journal de Dimanche revealed 66 percent of French people are in favour of reducing family allowances, depending on earnings.
In France the allowance is only paid out to families with two or more children.
A recent report by France TV contradicted the popular view that France is the most generous country in Europe when it comes to family allowances. Sweden, Ireland and Germany all hand out more than France.
In Spain, Italy and Great Britain, the allowances are limited depending on salary. In the UK, for example, families where one couple earns €50,000 or more each year no longer have the right to receive the full child benefit.