Government efforts to tackle child poverty have "forgotten" to help poor parents who work, a think tank says.
The IPPR says the benefits system fails to reward working parents
The Institute for Public Policy Research (IPPR) says 1.4m children in Britain live in poverty despite having at least one working parent.
Since 1997 Labour has lifted 600,000 children out of poverty, but the number from working families has stayed the same, the IPPR says.
The government insisted "significant progress" has been made under Labour.
In 1999, the government vowed to eradicate child poverty altogether by 2020.
The IPPR says the government is failing to reward those parents who get jobs in favour of those who do not work.
And its report says the benefits system offers little incentive for a second parent to get a job.
The most widely used definition of the poverty line is 60% of median income, the mid-point on the scale of national earnings.
The IPPR report was based on the example of a couple with one child aged under 11 earning £260 per week or less before housing costs or a couple with two children aged under 11 earning £303 per week or less before housing costs.
It is suggesting several reforms to combat the problem of what it calls the "forgotten million", including:
- A new Personal Tax Credit Allowance to make it more attractive for both adults in a two-parent family to work. The second parent would be able to earn up to £100 a week before their tax credits are reduced, a move the IPPR says would make a family earning the minimum wage £36 a week better off.
- Raising the value of tax credits for couples by one third to £91.31 a week. The IPPR says this would benefit 1.6m families and lift 200,000 children out of poverty.
- Increasing the minimum wage in line with average earnings growth, ensuring tougher enforcement of the minimum wage, and extending the adult rate to people aged 21 and under.
Kate Stanley, head of social policy at the IPPR, said "significant progress" had been made since 1997, but the challenge now was "to ensure that work really is a route out of poverty".
"Tax credits and the minimum wage have 'made work pay' relative to being on benefits, but these don't yet go far enough to ensure more children are lifted out of poverty," she said.
"More action is needed to combine financial support and measures to boost parental employment with action to deliver fairness on pay and opportunities for progression at work."
A Treasury spokesman said: "The government agrees work is the best route out of poverty, and this is a key part of its strategy."
He added: "Reforms to tax and benefits since 1997 have greatly improved work incentives and made work pay, and there are now 2.6 million more people in work and 600,000 children have been lifted out of poverty.
"The government is committed to meeting its target of halving child poverty by 2010, and decisions on tax credits and financial support will be taken in the budget and pre-budget report in the usual way."
Claire Walker, of Save the Children, said poverty was the reality for millions of UK children.
"The public must say enough is enough and demand that the government invests the necessary £4bn needed to meet its own target of halving child poverty by 2010."
In December, the Joseph Rowntree Foundation claimed the government's child poverty strategy had lost momentum and was in "urgent need" of a rethink.