A quarter of low income households are spending more than 25 percent of their income every month just by keeping up with debt repayments.

New research by thinktank, Resolution Foundation, has shown that households on low incomes with around with an average of £15,800 of disposable income are struggling with debt problems.

The study found that low income households were also often in negative equity and had little or no savings. The research has prompted concerns that such households are at risk of homelessness if they lost their jobs, which is a real concern in the current economic climate.

The Resolution Foundation has warned that around 7.2 million low earners would continue to be at risk of redundancy long after the recession technically ends due to the industries in which they are employed.

Action has been called for from the government to provide more support for low income households to prevent further ramifications for the UK economy.

The chief executive of Resolution Foundation, Sue Regan, said: "What's important is it's not so much about when we get out of recession. It's how sustainable the economy will be going forward if we increasingly see low-income households default on loans or lose their house. If we don't address this, it has got big economic ramifications for UK plc."

Changes suggested by the thinktank include bringing forward the formal skills assessments for the unemployed through Job Centre Plus to be brought forward from 26 weeks to 13 weeks, in order to speed up the process of getting people back into work. The thinktank also suggests making it easier for employees to mix training with working life.

Banks are also being called upon to help low income households. The thinktank has urged high street banks to use methods of debt counselling to low income households when they miss their first mortgage repayment.

Youth unemployment is also a major concern, with levels being the highest since records began at 946,000.