The government's benefits cap is failing in all its professed aims and further marginalising the poor, according to a damning report by the Chartered Institute of Housing (CIH) yesterday.

The cap - rolled out in July - limits benefits to £500 a week for families with children or £350 a week for those without.

The institute's study examined the results of the cap in Haringey, one of four London boroughs chosen as pilot areas.

It found that of 747 households which saw their benefits docked just 74 were able to find work to avoid their benefits being cut, while 11 households increased their working hours to avoid the cap.

Almost 50 per cent were forced to claim extra payments from the council to help them pay their rent, the CIH said.

CIH chief executive Grainia Long said: "The government said the benefit cap would save money and encourage people into work, but this report shows it is far from achieving both of those aims in one of the worst affected areas."

The amount lost by the households hit by the cap ranged from 15p to £374.50 a week, with 51 per cent of claimants losing between £50 and £199 a week.

Around 2,300 children were affected by the cap with larger families experiencing the highest loss.

The CIH said wider welfare reforms such as the council tax reduction scheme were hitting at the same time, further reducing household incomes.

Haringey Council leader Claire Kober said the research showed that "while the government may be making some savings, the real costs are just being passed to local councils already under enormous financial pressure."

Government workers' union PCS general secretary Mark Serwotka said: "With almost seven million people out of work or looking for more hours and only half a million job vacancies, it is a complete myth that people are choosing a life on social security, and the benefit cap should be scrapped immediately," he said.