Cohabiting couples would be entitled to financial settlements if they split up, under proposals from the Government’s key adviser on law reform.

A report by the Law Commission says that partners who have been together for two years or more, or have had children together, should be able to make claims.

Under the scheme, courts would have the power to order former partners to sell their home, pay lump sums and even share their pensions to balance out the “pluses and minuses of the relationship”. Those making claims would have to prove that they had made “qualifying contributions” to the relationship, which have resulted in “enduring consequences”. They would have to prove that their relationships put them at a long-term economic disadvantage or gave their ex-partners a clear financial advantage.

The authors of the report went out of their way to allay fears that the proposals would undermine marriage. They included data from Australia that showed how rights for cohabitees had little impact on the marriage rate.

Stuart Bridge, who led the review, said that the scheme was distinct from divorce law because it would not apply to all cohabitants automatically, and because it would relate only to the financial contributions made during the relationship. Under divorce law there is an assumption that partners are equals regardless of the financial contribution made and assets and wealth are divided equally.

The courts would be encouraged to rule in favour of “clean break” one-off settlements. The only time maintenance would be deemed appropriate is if it was to pay for childcare.

Mr Bridge said that young people who rented a flat together for a few years would not be deemed eligible and that couples would be able to opt out of the scheme formally. “All the work we have done suggests the reforms we are recommending would not harm marriage. We consider that our scheme strikes the right balance between the need to alleviate hardship and the need to protect couples’ freedom of choice.” The financial needs of either party are not to be taken into account, only the contribution made. There are two million cohabiting couples in Britain and the figure is expected to reach 3.8 million by 2031.

There was no immediate sign from the Government that it would press ahead with the scheme, but the Ministry of Justice welcomed the report: “We will read it with interest and consider its recommendations carefully.”

Explore Law

• Columnists

• Law Panel

• Law Reports

• Student Law

Times Recommends

• The best legal yarns this Christmas
• Legal school 'earned £1m by exploiting bar course'
• Axe may fall on 5,000 more City lawyers