Senior Lib Dem minister Danny Alexander has rejected George Osborne's remarks on the Mick Philpott case, saying it is wrong to "connect" it to "much wider" concerns over the welfare state.
Unemployed Philpott has been jailed for killing six of his children in a fire.
Mr Osborne questioned whether it was right for the the state to "subsidise" people with Philpott's lifestyle.
But Mr Alexander, his number two at the Treasury, said the case should be treated as "an individual tragedy".
Philpott was convicted of manslaughter, along with his wife Mairead and friend Paul Mosley, over an arson revenge plot that went wrong last year.
Much of the coverage of the trial focused on the fact Philpott, his wife and his mistress had lived with him at the three-bedroom council house in Derby with 11 of their children.
'Let the case lie'He received more than £8,000 a year in child benefit, as well as the income support and wages paid to his wife and mistress, which went into his bank account.
Philpott was jailed for life on Thursday and, on a visit to Derby shortly afterwards, Conservative Mr Osborne said there was "a question for government and for society about the welfare state - and the taxpayers who pay for the welfare state - subsidising lifestyles like that, and I think that debate needs to be had".
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George Osborne: Philpott case raises questions about the welfare system
But Mr Alexander, Chief Secretary to the Treasury, said: "George Osborne is right that there needs to be a wide debate about the future of our welfare system, but the Philpott case is an individual tragedy.
"I think that's where we should let that case lie. I wouldn't want to connect that to the much wider need to reform our welfare system."
The chancellor's comments have proved controversial.
For Labour, shadow chancellor Ed Balls called them the "cynical act of a desperate chancellor", adding that "to link this wider debate to this shocking crime is nasty and divisive and demeans his office".
And former Liberal Democrat education minister Sarah Teather joined in the criticism, saying she was "shocked and appalled that George Osborne has stooped so low as to make a crude political point out of the tragic deaths of six young children".
But Conservative Party chairman Grant Shapps backed the chancellor, saying: "Of course there a proper debate to be had about where this should begin and end, and of course that case highlighted some of the extremes."
Philpott has been told he will serve a minimum of 15 years in prison, while Mairead and Mosley were told they would serve at least half of their 17-year sentences.
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