Millions of people in poverty live in UK households where at least one person is in work, the Living Wage Commission has said.
The situation was deemed a “national scandal” by its chairman, the Archbishop of York, Dr John Sentamu.
Out of 13 million people living in poverty in the UK, 6.7 million are in a family where someone works, the commission said.
A living wage is defined by the commission as "an hourly rate of income calculated according to a basic cost of living in the UK and defined as the minimum amount of money needed to enjoy a basic, but socially acceptable standard of living".
The UK living wage for 2014 is £7.65 an hour, and the London living wage is higher at £8.80 per hour, because of the greater expense of living there.
But the national minimum wage currently stands at £6.31 an hour.
Archbishop Sentamu said that the government, the biggest employer of low-paid people, should look at pay levels and that private sector companies that are capable should also pay.
The UK government should aim to cut the number of low paid workers by one million by 2020, the commission said.
"Working and still living in poverty is a national scandal," said Archbishop Sentamu.
"For the first time, the majority of people in poverty in the UK are now in working households."
Dr Adam Marshall at the British Chambers of Commerce said: "Some businesses simply cannot afford to pay a living wage just yet - which is why the commission rejected a compulsory living wage.
Mike Cherry of the Federation of Small Business said that some sectors such as retail, construction and care homes, can only afford to pay at or just above the minimum wage.
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