Image copyright PA
In a speech in London, the work and pensions secretary confirmed she would delay asking MPs to authorise the transfer of three million people on to universal credit until next year.
And she scrapped plans to extend a two-child benefits cap to families with children born before 2017.
Ms Rudd said she wanted universal credit to be compassionate and fair.
Shadow work and pensions secretary Margaret Greenwood said: "Universal credit is clearly failing and the government should stop the roll out now."
The speech came as four single mothers won a High Court challenge over the way payments are calculated.
When asked about the court ruling, Ms Rudd said her department would be coming forward with a response.
Will the changes help you? Email email@example.com Analysis
By Michael Buchanan, BBC social affairs correspondent
This speech was billed as a reset of universal credit, a clear acknowledgment from Amber Rudd that further tinkering with the troubled reform will no longer do.
The last two budgets have seen billions spent trying to reduce the problems that have become ever-more obvious, from increasing use of food banks to private landlords refusing to take people on universal credit.
But this speech demonstrates that Amber Rudd believes a more fundamental assessment of the benefit is needed. That makes her the first work and pensions secretary since Iain Duncan Smith to try to take responsibility for welfare reform rather than simply managing the existing system.
She will need to convince the Treasury in particular to back her judgement.
Speaking in south London, Ms Rudd insisted that the system would still be fully rolled out by 2023 - but added she would consider the findings from a pilot due to run in 2019.
She said her department would build an online system for private landlords so they can request for rent to be paid directly to them.
Ms Rudd argued this would give landlords "greater certainty" that rent would be paid, and make it easier for tenants in the private sector to keep their homes.
Currently just 5% of private landlords who are paid through universal credit receive the rental payment directly from government. Media playback is unsupported on your device Media captionWhat's the problem with universal credit?
The minister also said she had asked Job Centre Plus to test how payments to claimants could be made more frequently.
She added that once this had been piloted, frequent payments could be made available "more widely so those in genuine need can take it up more easily".
BBC political correspondent Ross Hawkins said Ms Rudd also remained under pressure to shorten a five-week wait before new universal credit claims are paid. Image caption Ms Rudd's changes only protect families with children born before April 2017. For families where the third child is born after April 2017, the changes have no effect and the impacts the chart is showing still hold What is universal credit?
Universal credit is a benefit for working-age people, replacing six benefits and merging them into one payment:
It was designed to make claiming benefits simpler, and is being introduced in stages across the UK.
During her first major speech on welfare, Ms Rudd also said she wanted to ensure that the main carer in a household would be the primary recipient of universal credit.
On the two-child limit, she said it was "not right" for it to apply to those who had their children before the cap was announced.
"These parents made decisions about the size of the family when the previous system was the only system in place," she said.
The "child element" of universal credit varies, but is worth at least £231.67 a child per month.
The Child Poverty Action Group said the decision was "fantastically good news", but said the two-child cap should be scrapped for all future families too.
Labour also called for the cap to be removed, stressing the change "does not go far enough".
Ms Rudd, who became work and pensions secretary in November, accepted there were problems with universal credit, and promised to "learn from errors" and "adjust" the system after taking expert guidance.
Her predecessor Esther McVey had already announced changes to ensure claimants were given more time to switch to the benefit and would not have to wait so long for their money.
The system had been the target of complaints that it was forcing some claimants into destitution and even prostitution. Media playback is unsupported on your device Media captionStruggling with universal credit in Hartlepool
However, Ms Rudd defended universal credit as "a force for good", adding that "it pumps much needed fresh air into a failing system".
"As a nation, I believe we all want a decent safety net: if you're facing a difficult moment in life, the state should be there to help you.
"But it is vital that people are supported by this safety net, not trapped beneath it."
Will the U-turn help you? Or will you and your family still be subject to the cap? Get in touch by emailing firstname.lastname@example.org
If you are happy to be contacted by a BBC journalist please leave a telephone number that we can contact you on. In some cases a selection of your comments will be published, displaying your name as you provide it and location, unless you state otherwise. Your contact details will never be published. When sending us pictures, video or eyewitness accounts at no time should you endanger yourself or others, take any unnecessary risks or infringe any laws. Please ensure you have read the terms and conditions.
Terms and conditions
Facebook Google+ Twitter Digg