The Joseph Rowntree Foundation (JRF) said more than six million people classed as living in poverty, were in households where people worked.
Excluding pensioners, in-work poverty now outstrips workless poverty, while 1.4 million people were now working part-time when they wanted a full-time job, an increase of 500,000 since 2009, said the report.
Spending on benefits and tax credits has never been higher, at 13 per cent of GDP, while almost five million people have claimed Jobseeker’s Allowance at least once in the last two years, said the Monitoring Poverty report, written by the New Policy Institute (NPI).
Julia Unwin, chief executive of JRF, said: “The level of in-work poverty is the most distinctive characteristic of poverty today. We need a relentless focus on fixing the labour market to ensure people have the opportunity to improve their prospects.
“More people than we can imagine will have experienced poverty since the downturn, circling in and out of insecure, short-term and poorly paid jobs.”
TUC general secretary Brendan Barber commented: “People are taking any job they can to make ends meet but unless our economy starts growing again we won’t deliver the high quality full-time jobs that people really need.
“Some employers are fuelling low pay Britain by paying staff the bare minimum when they can easily afford to pay more. We want more employers to pay a living wage.”