Unemployed people without children receive only half the income they need to live a basic life, according to the Joseph Rowntree Foundation (JRF).
The anti-poverty charity also says that those with children receive a third less than needed, forcing more young people into poverty.
The report shows that single people need to earn at least £16,850 a year before tax in 2013 for a minimum acceptable living standard, while couples with two children need to earn at least £19,400 each.
But the cost of a basic basket of goods and services that low income people buy has been increasing faster than inflation for many years.
In the last decade, it has risen by 45%, while the government's measure of inflation has risen by only 30%, and the last year has seen this continuing at 4% for the basket against inflation of 2.4%.
Some groups are doing better; pensioners claiming Pension Credit receive incomes close to minimum requirements, and the 'triple-lock', which guarantees above-inflation rises, will maintain or improve this.
However, over the past five years, working-age benefits have deteriorated substantially relative to minimum income needed, and the coalition government's policy of below-inflation rises will see this situation worsen until at least 2016.
Families with children have seen further problems. Higher tax allowances have been offset by Child Benefit freezes and below-inflation tax credit rises. In recent years, families' earnings needed to achieve minimum incomes have been rising rapidly, while actual wages have stagnated.
UnemployedNet runs a campaign demanding the government increase benefits by the inflation rate that really applies to claimants.
The Benefits Price Index (BPI) would include only those things, like food, gas and electricity, that claimants actually buy, stopping the ten-year-long reduction in living standards by stealth.