UK society risks being "permanently divided" because of poverty, according to a report from the Social Mobility and Child Poverty Commission – and the three main Westminster parties are failing to grapple with the issue, according to the Commission's chair.

It also said that the Government's target of reducing child poverty by half by 2020 would not be met.

Introducing the report, former Labour minister Alan Milburn said that the Government had "discredited existing child poverty targets and failed to put in place new ones", creating an "unholy mess".

According to the Commission's report, "absolute child poverty increased by 300,000 between 2010-11 and 2012-13" and "independent experts expect child poverty to increase significantly over the next few years".

As many as 1.4 million children are now in "relative poverty" due to the effects of rising rents and mortgage costs since 2010. Some 20 per cent of Scottish children and 24 per cent of Welsh children live in absolute poverty.

Mr Milburn called for action to tackle youth unemployment and the housing shortage.

The commission's report said that the Government should give the Office for Budget Responsibility "a new role to report on the poverty and social mobility impacts of budgets". It also said that "all political parties come forward with a clear set of plans before the election next year for what they will cut and how they will avoid negative impacts on social mobility and child poverty".

Liam Purcell, a spokesman for Church Action on Poverty, told Christian Today: "There is nothing surprising here for anyone who takes an interest in these questions. We entirely agree that not enough is being done, and the rising extremes of poverty prove it."

He condemned what he said was political parties' "competition to seem the harshest" on benefits. "There has been a rise in employment but not in living standards," he said. "Most new jobs are part time, low paid and insecure. More people are under-employed and actually want to work more, and there is the problem of zero-hours contracts."

Churches, he said, could lead by example and challenge politicians on issues such as the Living Wage. He praised the Church of England for introducing the Living Wage in all of its 4,700 schools, saying it would make a huge difference to low paid workers.