SOME 10,000 children have fallen into poverty due to Labour’s decision to keep the two-child benefit cap, new analysis reveals.

The Child Poverty Action Group said its research showed the widely condemned policy to be a key driver of child poverty, adding that it “must be abolished.”

Speaking ahead of Parliament reopening today, chief executive Alison Garnham said: “The clock is ticking while child poverty rises — and the two-child limit is the key driver of the increase.

“Scrapping it is the most cost-effective way to stop more kids being pulled into poverty on the government’s watch.

“We welcome the government’s child poverty taskforce, but the damage grows every day — the policy must be abolished in the upcoming budget.”

The government has repeatedly claimed that it cannot scrap the Tory welfare policy due to the parlous state of the public finances.

This is despite continuous pressure from campaigners and some of its own MPs, including seven who were suspended for voting against the cap’s retention in July.

The Joseph Rowntree Foundation said the Child Poverty Action Group figures were “a reminder that hardship isn’t on hold” and called on the government to set out a plan this autumn.

Foundation principal policy adviser Katie Schmuecker said: “Not only is this morally the right thing to do, it will also begin to build greater economic security for households, taking some pressure off public services and strengthening our economy.”

The policy restricts child tax credits and universal credit to the first two children of most households.

The Institute for Fiscal Studies recently estimated that axing the two-child limit would lift 540,000 children out of absolute poverty, at an initial cost of £1.7 billion a year to the government, rising to £2.5bn a year.

“Among the options available to the government on benefits policy, removing the two-child limit would be the single most cost-effective policy at reducing the number of children classified as in poverty,” the think tank said.

A government spokesperson said: “No child should be in poverty —that’s why our new cross-government taskforce is developing an ambitious strategy to reduce child poverty and give children the best start in life.”

The taskforce, made up of ministers from across the government, is expected to publish its strategy next spring.