Ministers are facing calls from MPs to overhaul the system of funeral support payments amid warnings some families are unable to afford to bury their loved ones.
The Commons Work and Pensions Committee said the maximum award for essential funeral costs under the means-tested social fund funeral payment (SFFP) system had been frozen at £700 for 13 years and now no longer covered the cost of a "simple" funeral.
The committee said it had heard "distressing" evidence of one mother who was forced to freeze her son's body for months while she saved to pay for a funeral and of bereaved people who were denied their relative's ashes because of a shortfall in the final payment.
It urged the Department for Work and Pensions (DWP) to negotiate with the representatives of funeral directors to agree a reasonable cost for a simple "fair funeral" and then set the maximum SFFP accordingly.
The committee also called for the system of bereavement benefits to be extended to cover cohabiting couples who are not married or in a civil partnership.
"Funeral payments for those who can prove they are entitled - and that is a very uncertain and onerous process - now fall far short of covering even a basic funeral," committee chairman Frank Field said.
"We heard clear evidence of the distressing circumstances and debt this is leading people into, at a time when they are grieving and vulnerable. We do not want a return to the spectre of miserable 'pauper's funerals'.
"The support for widowed parents is also badly outdated, with benefits denied to cohabiting parents. Penalising a child on the grounds of their parents' marital status is as unjust as it is anachronistic."
A DWP spokesman said: "We are modernising bereavement benefits, introducing a simpler and fairer scheme that will better assist people in what can be an extremely difficult time.
"The planned new bereavement support payment will provide a higher lump sum payment than currently is offered and more people will be able to claim this full support now we have removed the lower age limit."