Families with children stand to lose £511 a year on average under tax and benefit changes coming into force from Friday, an analysis by a respected think-tank showed.
Anti-poverty campaigners dubbed the start of the financial year Bad Friday, warning cuts totalling more than £2 billion were taking effect over the Easter weekend.
Shadow chancellor Ed Balls said the impact calculated by the Institute for Fiscal Studies was proof of a "tax credits bombshell" with up to a million households losing eligibility entirely.
As political sniping continued over the effects of last month's Budget, the Treasury retorted by claiming the average household would be £5.50 a week better off. More than 15 times as many would see an improvement to their finances than would be worse-off thanks to an increase in income tax allowances, Economic Secretary Chloe Smith said.
Mr Balls, who is visiting a children's centre in Leeds to highlight the issues, said the IFS figures revealed a "bombshell".
"Families on middle and low incomes are this weekend facing a tax credits bombshell from David Cameron and George Osborne," he said. "For all the Government's talk about increasing the personal allowance, these independent figures show that while they may be giving with one hand they are taking much more away with the other.
"That is why families with children will be an average of £511 a year worse from tomorrow," he said - contrasting that with the decision to cut the top rate of income tax from 50p to 45p. "Instead of cutting the top rate of tax for the richest and giving the highest earners a £1.6 billion tax cut on their pensions, the Government could stop these unfair and perverse changes."
Labour pointed to Government figures suggesting more than 850,000 families stood to lose their child tax credit - worth around £545 per year - from the start of the financial year. Another 212,000 couples on less than £17,000 a year would lose working tax credit unless they were able to increase their hours of employment, the opposition said.
Child Poverty Action Group chief executive Alison Garnham, said: "This year's holiday will feel more like Bad Friday for millions of families as they come to terms with over £2 billion of cuts.
"Some of the poorest working families will lose thousands of pounds from their annual income, leaving them in a desperate struggle to pay for basics like groceries, clothes and household bills."