The implementation of the government's flagship benefit reform rests on "a knife edge" and because of recent Treasury cuts is in danger of failing to help claimants, a leading think tank has warned.
The Resolution Foundation said changes to universal credit could leave more than 2.5 million families worse off, some by more than £3,000.
Universal credit (UC), which rolls six benefits into a single monthly payment, has been beset by issues ranging from poor understanding of the new system to serious IT faults.
Earlier today, work and pensions secretary Stephen Crabb announced its national rollout, intended to be completed by 2021.
A report by the Resolution Foundation published on Tuesday said Treasury cuts to UC, which is designed to help low earners keep more of their salary and encourage them to move off benefits and into work, were "fundamentally damaging its ability to deliver against its purported aims".
In a tough critique, the Resolution Foundation said UC could become "little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer".
Seeing Universal Credit provide support to unemployed @Londonbridgejcp UC now available every job centre nationwide
A 48-year-old man, who wished to remain anonymous, told BuzzFeed News he had been living without government support since 30 March after he was transferred from jobseeker's allowance (JSA) to UC in Worcestershire.
"The system is a shambles," he said. "Many people are not getting paid on time and [are] having to call the helpline to see where their money is."
He said: "The only way to find out what's happened is to call and pay for the call."
Setting out a three-point plan to resolve the system's issues, the Resolution Foundation – which is chaired by former Conservative minister David Willetts – called on Crabb to "reclaim" the benefit system.
Although the report said around 200,000 families would be better off as a result of UC changes, it concluded that "the majority of working families with in-work support will be detrimentally affected".
By including wider cuts to benefits, particularly housing support, the think tank further that noted associated costs could leave some families £3,400 worse off by 2020.
The report comes after the dramatic resignation in March of Crabb's predecessor, Iain Duncan-Smith, amid bitter claims that his original vision for UC had been derailed by Treasury cuts.
The shadow work and pensions minister, Owen Smith, said on Tuesday that "Tory cuts will completely undermine work incentives in the programme," and that the government should stop "slapping themselves on the back for delivering cuts to working families right across the country".
Meanwhile, the Liberal Democrat work and pensions spokesperson, Zahida Manzoor, said the original "dream" intention of UC was "becoming a nightmare".
A spokesperson for the Department for Work and Pensions told BuzzFeed News UC was “transforming lives, with claimants moving into work faster and earning than under the previous system".
They said: “For the first time we are also helping people to progress in their careers, and for families we are removing one of the biggest barriers to getting into work by paying for up to 85% of eligible childcare costs – something which was ignored by the Resolution Foundation.”