Australian families are living off as little as $14 a day, according to a national study by the Salvation Army that describes the findings as "utterly shameful".
The welfare organisation surveyed 1600 people who sought its assistance, uncovering growing levels of poverty driven by the rising cost of housing.
The research found respondents with children were living off $14-$16 a day after paying for housing expenses.
One in five parents who took part in the National Economic and Social Impact Survey said they could not afford medical treatment for their children and two in five could not afford regular dental treatment.
The Salvation Army's Major Bruce Harmer said the findings painted a bleak picture for the estimated 2.5 million Australians who live in poverty.
"The results of this extensive survey are utterly shameful," he said. "It shows the real level of struggle taking place in our 'lucky country'."
The survey found respondents on any type of welfare benefit had an average of $16.96 a day to live on once they paid for accommodation. People on the Newstart Allowance were left with $15.29 a day after housing costs.
More than two-thirds of respondents were in extreme housing stress, spending 62 per cent of their total income on accommodation.
One in two respondents reported cutting back on basic necessities, with 43 per cent going without regular meals and one-third pawning belongings to cover living expenses.
The report recommends all governments work together to devise a national strategy to address the increasing rates of inequality, with a focus on resolving the root causes of poverty.
Captain Paul Moulds, who leads the Salvation Army's Auburn centre, has watched the growth in demand for assistance as welfare payments have not kept up with rising housing costs.
"People are struggling to survive," he said. "It's becoming almost impossible for a large group of people to improve their circumstances.
"This government keeps talking about jobs and growth but the problem is when you are living off such a small income, it's really hard to get yourself to a point where you are able to look for a job."
Little Bay pensioner Diane Dover has found it difficult to find work due to a disability, but the 57-year-old has learnt to spend her money wisely, looking out for specials at low-cost supermarket chains Aldi and The Reject Shop and eschewing sausages and chops in favour of cheaper food such as tinned soup and noodles.
"I feel as if I'm doing OK," she said.
The Salvation Army will release its report on Wednesday before its major fundraising drive, the Red Shield Appeal, from May 28-29.
