Campaign groups have attacked "truly shocking" new figures showing four million children are affected by poverty.
The Children's Society said the situation was "clearly getting worse", estimating that almost a third of children were now living in poverty.
The Government said official statistics showed that the percentage of children living in absolute low income was at a historic low.
Ministers said household incomes have risen to a record high, and the gap between the richest and poorest was lower than in 2010.
The average household takes home a record £481 a week, £300 a year more than in 2014/15, said the Government.
Work and Pensions Secretary Damian Green said: "It's good news that household incomes are at a record high and it shows we have a strong economy.
"But we know there is more to do. I'm committed to tackling disadvantage and these figures confirm that work is the best route out of poverty."
Matthew Reed, chief executive of the Children's Society, said: "Any child living in poverty is one too many, but it is truly shocking that four million children are now affected by poverty.
"The situation is clearly getting worse, with nearly a third of children, or around nine in the average classroom, now living in poverty."
Alison Garnham, chief executive of Child Poverty Action Group, said: "Today's figures show that child poverty has increased to four million, a level we haven't seen since 2007-8.
"The number of poor children in working families has reached 67%.
"The Prime Minister spoke about injustice on entering Downing Street but there is no greater burning injustice than children being forced into poverty as a result of Government policy and no greater damage to our long-term prosperity than failing to invest in our children."
Justin Watson of Oxfam, said: "It's deeply worrying that whilst the economy grows, so many people are being left behind in poverty.
"There are now more people in poverty in the UK than there have been for almost 20 years and a million more than at the beginning of the decade.
"These figures show that urgent action is needed to help the vast number of people in Britain who are aren't managing at all."
A Department for Work and Pensions spokesman said: "Average household incomes have risen to a record high and income inequality is lower than in 2009/10.
"Today's figures confirm that work is the best route out of poverty, so it represents significant progress that the number of children living in a workless household is down by 590,000 since 2010.
"One child living in poverty is one too many and we remain committed to tackling the root causes of disadvantage."
Debbie Abrahams, Shadow Work and Pensions Secretary, said: "These statistics show a worrying increase in both poverty and inequality. Four million children and two million older people are now living below the breadline. Those living with a disabled person are more likely than ever to be struggling to make ends meet.
"This is a direct result of this Government's seven wasted years of austerity and punitive social security cuts."
Campbell Robb, chief executive of the Joseph Rowntree Foundation (JRF), said: "These troubling figures are warning signs we could be at the beginning of a sharp rise in poverty, with forecasts suggesting child poverty could rise further by 2021. If we are to make Britain work for everyone, getting to grips with high levels of poverty must be the starting point.
"Half a million more people - including more 200,000 pensioners and 100,000 children - are now living on incomes which mean they struggle to make ends meet and wake up every day facing insecurity and uncertainty."
Rosie Ferguson, chief executive of single parents' group Gingerbread, said: "Today's new figures show that child poverty is being allowed to fester rather than being tackled head on.
"That nearly half of all children in a single parent family are now in poverty is a shocking statistic. That's 140,000 more children in poverty in single parent families over the course of just one year."