Disabled people who have a car through the Motability scheme will no longer be allowed "premium" vehicles such as BMWs and Mercedes.
Motability said the change would be made with immediate effect as it announced a greater focus on using British-made cars, saying it wanted half of the cars it leases to be British-built by 2035.
Critics have been calling for the government to address the rising cost of the Motability scheme, which allows people on certain disability benefits to lease vehicles more cheaply, ahead of Wednesday's Budget.
Chancellor Rachel Reeves said the increased use of British-built cars would "support thousands of well paid, skilled jobs" and help to boost the economy.
The number of people with a Motability car has increased sharply in recent years, to 860,000. Many of the cars leased by the scheme are adapted to be accessible for wheelchair users.
Higher-end vehicles account for about 50,000 of the vehicles leased by the scheme, with customers paying the additional cost for a premium vehicle using their own money.
Motability has long argued that the scheme provides a lifeline to disabled people.
But as well as the cost of the scheme increasing overall, some critics have said customers should not be able to get a "premium" car subsidised by the taxpayer.
Speaking earlier this month, Heidi Alexander, the transport secretary, said she would be "comfortable" with removing "really high-end cars" from the scheme.
Earlier this month, Farah Black, a disabled woman in Northern Ireland, spoke to the BBC about leasing a BMW on the Motability scheme.
She was unable to drive at all for 12 years after a serious injury, which led to life-threatening sepsis and the amputation of her leg.
She said she cried when she picked up her BMW, which is adapted for her needs as a wheelchair user and which she paid the additional cost for as an advance payment.
"We should all have a choice," she said.
"Just because I'm disabled – why can I not have a choice and drive what I want?"
Motability said it was "refocusing" which vehicles were available on the scheme, adding that it would "focus on vehicles that meet disabled people's needs" and are "safe, reliable and affordable to run".
As well as Mercedes and BMW, other brands being removed as part of the change include Audi, Alfa Romeo and Lexus.
The brands are no longer available to select as options on the Motability website.
But Matt Ryder, who used to work on Motability policy for the Department for Work and Pensions, said the problems with the scheme go beyond offering premium brands.
He said the scheme, which only leases brand new cars which are replaced every three years, could become more efficient by supplying nearly-new cars instead.
"A car is not a luxury, but a brand new car is a luxury purchase," he said.
On its commitment to British-built cars, Motability said it would be working closely with manufacturers in the short term to increase the proportion of cars it leases which are made in the UK.
It wants 25% of cars on the scheme to be UK-built by 2030, up from 7% currently.
Andrew Miller, chief executive of Motability Operations, said the scheme was a "lifeline to freedom and independence" for its customers, adding that they "want to do even more to support the economy" going forward.
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