Universal Credit, a new system of welfare payments being rolled out by the government, will leave people worse off according to research by the Institute for Fiscal Studies.

The new benefits system is designed to combine six benefits into one monthly payment and was initially intended to pay more than the current system. However the IFS today said cuts to the programme mean this would not be the case.

According to the IFS research, 2.1 million families will lose an average of £1,600 a year. Although 1.8 million families will gain £1,500 on average, 1.1 million families will lose £2,300 a year and single parents face losses of £1,000 a year.

Church Action on Poverty praised Universal Credit as a principle but criticised the way it was rolled out.

"The idea of simplifying benefits and making work pay is a good one," spokesman Liam Purcell told Christian Today. "But Universal Credit is being introduced at the same time as huge cuts and other changes to our benefits system.

"Those cuts, together with unacceptable delays and the increasing use of punitive sanctions, are already making life much harder for vulnerable people – even leaving them destitute.

"Church Action on Poverty is calling on the Government to think carefully about how they can use the roll-out of Universal Credit to restore the vital 'safety net' principle in our benefits system. These figures show how urgent the issue is."

Robert Joyce, author of the IFS research, also acknowledged the strengths of Universal Credit but highlighted that for single parents, the system would actually create a disincentive to work rather than encourage it.

For couples, Universal Credit encourages just one of them to work, not both, and single parents will keep eight per cent less of their earnings than under the current system.

The new system is work and pensions secretary Iain Duncan Smith's innovation, who has claimed that too many people are trapped on benefits. However rolling out the system has suffered numerous delays and cuts and shadow work and pensions secretary Owen Smith said Duncan Smith's claims were in "tatters".

"Everyone can now see that successive cuts to Universal Credit have destroyed many of the work incentives that were supposed to be the very reason for the scheme, hitting single parents particularly hard," he said.

However a spokesman for the Department for Work and Pensions said: "Universal Credit will make work pay and increase financial incentives for people to work more, while also bringing the welfare bill under control."

He added: "Universal Credit also includes a wide range of additional benefits – including increased childcare and more support from a dedicated work coach both things that were ignored in the IFS's analysis."