The Church of England is urging the Government not to go ahead with its planned three-year freeze on child benefit.

Chancellor George Osborne announced in the Budget last year that the universal weekly payment would be frozen for three years from April 2011.

The freeze amounts to a loss of around £73 per year for a family with two children in the period from 2011 to 2012, rising to £192.32 per year in the period 2013 to 2014. The Government expects to save around £3bn by 2015. It admitted that the decision to implement the cost-cutting measure had been hard but said the savings would go towards higher tax credits for those on low incomes.

In its submission to the Government consultation on tackling child poverty, the Church of England criticised the policy, saying that the financial loss would be “particularly hard for those on low incomes”.

It is urging the Government to retain child benefit in its current form, warning that it is “vital” to tackling child poverty.

The Rt Rev John Packer, the Bishop of Ripon and Leeds said: “From my experience of working with families in times of austerity, child benefit really gets to the purse of the one who feeds and clothes the children, it’s popular so its take up is large, it is simple and it is without stigma.”

The review recommends that governments should not automatically increase benefits for children but consider in each financial year whether the life chances of poorer children will be increased more by transferring any benefit increases into building the foundation years.

The Church acknowledges that intervention in the early years is vitally important for children, but argues that household income also matters to their wellbeing.

Its submission further states: “The cumulative effect on the income of families with children, of the cuts in social benefits and services is therefore a matter of great concern. They will not help the Government in its stated aim of tackling child poverty.”

The freeze on child benefit was strongly criticised by campaigners when it was announced last year.

Bob Reitemeier, chief executive of the Children’s Society, said the measure was a “big blow for very vulnerable families”.