Thanks for the replies. It would seem to me that it is not the immigration control status of the child that is relevant but if one parent is British and ordinarily resident in the UK then they are eligible to claim benefits. Therefore I don't think it is correct to look at the child's passport or even the immigration status of an overseas fiancee when claiming most benefits.
I suppose it could be a problem to claim Working Tax Credit for a fiancee where he/she does not have the right to work in the UK!!!!
Alfie