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That doesn't make any sense. You are getting LTD because you are not employable so there is no grounds for requiring that you maintain a residence where the employer is.
I suggest you tell the employer that while on LTD you are free to live where you like as you never agreed otherwise and there is no law that states where you must live while you are on LTD as you cannot work.
If that doesn't help I suggest you retain a lawyer and threaten a lawsuit.