Revealed: How Osborne will hammer the working poor

The full extent of the Tory's cash-grab on the working poor was revealed today, after research showed 3.2 million low-income workers would lose an average of £1,350 each.

The news comes as Labour appeared to be in disarray over the Budget plans, with a quarter of the party rebelling against Harriet Harman's demand that they abstain from a vote on the welfare bill last night.

"Before, during, and after the general election campaign the Tories rightly gained plaudits for their commitment to protect and advance the interests of Britain’s strivers," Labour MP Frank Field who commissioned the research, said.

"Yet in his first post-election Budget the chancellor has decided to knock this group for six. He has torn up the contract they signed when they took it upon themselves to find a job.

"So here is Labour’s opportunity to put itself once again on the side of Britain's army of strivers. First we must fight this double whammy of unfair cuts being forced upon them and, second, we need to push for improvements to the chancellor’s living wage proposal so that low paid workers genuinely are better off."

The analysis, by the House of Commons library, showed George Osborne's plans to change the tax credit system would cost 754,900 families earning between £10,000 and £20,000 a year up to £2,184 next year.

For a family earning £10,226, for instance, the loss would amount to £1,500.

Some 51,600 families earning between £20,000 and £30,000 will be made worse off by up to £2,884 next year.

Some experts believe the changes to tax credits could push working families back into out-of-work benefits or even discourage those currently out of work from going into employment at all.

Tax credits appears to be one of the few areas of Osborne's welfare changes Labour is willing to challenge, although only in certain areas.

After the Budget, shadow chancellor Chris Leslie seemed to support almost all the measures in the announcement, but voiced concern about changes to tax credits as a potential "work penalty". The party is expected to take a critical stance on the changes in committee stage.

But this morning it was still reeling from a painful and divisive vote in the Commons in which many MPs refused to accept their interim leader's demand to abstain on the welfare bill.

Forty-eight Labour MPs, including leadership candidate Jeremy Corbyn and mayoral candidates Sadiq Khan, Diane Abbott and David Lammy, rebelled against their party whips.

Tellingly, up to 40% of the 2010 intake appeared to have voted against the bill, suggesting a leftward drift under Ed Miliband.