One million working single parents face losing out when the Government's Universal Credit is brought in next year, a campaign group has warned.
Gingerbread said that a total of four million people will be worse off as a result of the unintended consequences of two schemes aimed at supporting low-income families.
It warned the Universal Credit could see the lowest-earning families losing out on an equivalent of two-thirds of the intended increase to their untaxed earnings when it comes into force for the first time in 2013.
For every £1,000 increase in the personal tax allowance, those not reliant on Government financial support will take home £200, while those on Universal Credit would get just £70, Gingerbread has claimed.
Fiona Weir, the group's chief executive, said: "Unless remedial action is taken, those who lose out will be hard working people whose wages still don't bring in enough to pay for their family's day-to-day essentials, including the majority of working single parents.
"We find it hard to believe that the Government would design two schemes to support people into work and lift their families out of poverty and yet have one effectively cancel out two-thirds of the other.
"But as things stand, the Treasury will be giving with one hand and taking with the other."
The group has called for a review of Government plans to enable low earners to keep more of the benefits of a higher tax threshold and ensure that all taxpayers can benefit equally from future rises in personal tax allowance.
The report suggests increasing the percentage of childcare costs covered by the Government from 70% to 80% and raising the per child allowance in Universal Credit by £300 per year.
Increasing the amount of money people can earn before paying tax - to £9,205 from next year - is a flagship policy for the coalition.
A Department for Work and Pensions spokesman said: "The fact is that Universal Credit will increase benefit payouts by £2bn, help to lift 900,000 adults and children out of poverty, and 2.8 million households will have higher entitlements as a direct result of the new benefit.
"Most importantly Universal Credit will make work pay and end a system that penalises people who do the right thing to boost their income by going out to work."
