The amount of additional money the Government has made available for households facing hardship as a result of brutal cuts to housing benefit would only stretch to £1.30 a month each in the first year, rising to £5.19 a month each in 2012/13, the National Housing Federation revealed.

Tough new rules on housing benefit payments due to be phased in next year will leave 642,160 households £39 worse off on average a month, leaving many unable to meet the cost of higher rent charges along with their other basic household necessities.

In an attempt to fend off political and public anger over the potentially devastating impact the cuts could have on some of the country’s poorest households, ministers announced an extra £130 million for local authorities’ discretionary housing payment over the next four years.

This is in addition to the existing allocation of £20 million a year which local authorities already use to top up payments for households such as disabled people and those on low incomes whose current housing benefit entitlements do not cover their rent.

But even if the new cash was distributed equally amongst all the households affected by the cutbacks coming in next year, it would equate to only 30p a week for each one in the first year and £1.20 per week from 2012/13 and would have little or no meaningful impact.

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The scale of the cuts mean hundreds of thousands of low income families face the prospect of falling into debt or hardship or being forced to move out of their home and away from their local community to live in cheaper accommodation further afield.

The modest discretionary fund would leave local authorities with an almost impossible task of deciding how best to spend the money and lessen the impact of the changes.

The discretionary pot would be spread even more thinly from 2013 when further cuts to housing benefit planned by the Government will hit social housing tenants who are deemed to be living in properties that are too large for their household. In our analysis 332,000 housing association tenants would be affected by these measures.

In addition, from 2013 the total discretionary housing payment pot will also have to stretch to cover the losses faced by claimants who will have been on Job Seeker’s Allowance for a year in either the private rented or social rented sector who will be required to pay 10 percent of their rent.

The Government projects that it will save at least £100 million per year from these changes. These "savings" will have to be made up by claimants from their Job Seeker's Allowance that was never intended to cover housing payments.

Federation Chief Executive David Orr said: "The transition fund is a drop in the ocean when you consider that these brutal cutbacks will leave over 600,000 families significantly worse off and plunge many into severe debt, poverty and force some families out of their homes.

"In reality this fund will only stretch to help 13% of households cover the full cost of the losses they will suffer once the cutbacks are introduced, or around £1.20 a week if it was distributed evenly to everyone affected.

"Ministers should not pretend that this fund will have any meaningful impact for the vast majority of people who are facing the prospect of being turfed out of their community, away from schools and jobs.

"If the Government is serious about protecting the vulnerable then it has a moral duty to reconsider the scale and speed of these cutbacks."

(CD)