The carers allowance is too complex and should be replaced with a single benefit for people unable to work for any reason, a think tank says.
Carers save the UK £87bn a year, experts say
The allowance is designed to help those caring for relatives for more than 35 hours a week,
But the Institute for Public Policy Research says it can be hard to claim, with 43% of those entitled to it - some 350,000 people - not receiving it.
The government said it was committed to helping carers.
The report proposed a new single benefit would replace carer's allowance, income support, jobseeker's allowance, and employment and support allowance.
Claimants would have to fulfil certain conditions negotiated with their personal adviser.
In return they would be asked about their needs and motivation to work in the future and be offered personalised support.
Carer's allowance is paid at £48 a week - lower than benefits for other people who are out of work.
The IPPR research found some 30% of jobless people with caring responsibilities were in relative poverty, as were 7% of those who combined care with employment.
Kate Stanley, IPPR's head of social policy, said: "Carer's allowance is not fit for modern families or a modern economy.
"If the government is to meet its target for full employment and people's aspirations for caring for older and disabled people within families, carer's allowance needs to go."
The government said it was committed to helping carers and was reviewing how they were supported.
A Department for Work and Pensions spokeswoman said: "We welcome this report as a useful contribution to the review but we are not persuaded that it is necessarily the right way to go.
"Our next step will to be consider all the contributions to the debate."