Theresa May's government will review 1.6m disability benefit claims in a U-turn which could see around 220,000 claimants get higher awards.
The review, which could take several years and cost as much as £3.7bn, covers disability claims made over a period of four years.
The reviews come after the government agreed not to challenge a December 2017 High Court ruling that said it had been "blatantly discriminatory" after it excluded people with mental health conditions applying for additional disability payments.
The review will identify all personal independence payment (PIP) claims. PIP is not means-tested or linked to employment status but claimants must undergo an assessment by private firms Atos and Capita, in which they must score at least eight points for a standard award and 12 for an enhanced award.
The assessment is based on two categories: daily living and mobility.
The High Court challenge was brought after the government excluded "psychological distress" as a reason for applying for the enhanced mobility part of PIP. That means that those incapacitated by mental health conditions would not have been eligible.
The December ruling stated that the discriminatory new criteria "cannot be objectively justified".
It is not yet clear how long the reviews will take. Sarah Newton, minister for disabled people, health and work, said: "Whilst we will be working at pace to complete this exercise it is important that we get it right."
Shadow work and pensions secretary Debbie Abrahams said: "The government was wrong to cut PIP benefits in the first place, wrong to bring in the PIP regulations last year and it was wrong to repeatedly ignore the views of the courts.
"This sorry debacle is one of their own making."
Ayaz Manji, policy and campaigns officer at mental health charity Mind, said, "More than 220,000 people will now be able to access support which could make the difference between whether or not people can get to work or appointments, see friends and family and live independent lives."
The Department for Work and Pensions has said that claimants will not have to undergo a new assessment to receive the correct award. The department plans to contact anyone affected, and said that all awards would be backdated to the initial date of each claim.