It has been revealed that the recession has forced around 558,000 poor families to resort to binding 'doorstep' loans.

Charity Barnardo’s stated that parents struggling below the poverty line are among those hit hardest by the financial downturn.

The group released its findings in its thought provoking report 'Below the Breadline' to raise awareness of the harsh times people face.

Factory workers and other labour sectors have also taken the worst blow, as unemployment has increased fastest among low-earning trades. Those who lose their jobs often have no savings and are unable to turn to relatives to seek economical aid.

As a result, the charity commented that such families have no other option but to take out doorstep' loans with interest rates of up to 367%.

Provident Financial, the largest lender, netted 558,000 new customers in 2008, up 33,000 on the previous 12 months. That took their total number of borrowing customers to 1,726,000 last year.

The report noted that someone taking out a £500 Provident loan over 31 weeks would end up repaying £775.

Families melting down in the meltdown

Several families have come forward to speak out about their worries on financial pressures.

Jelani, 14, is the eldest of four children and spoke of the toll the debts took on his mum. He said: "She can't cope. We're always asking for too much, she's asking for loans and debts. She's putting her life at risk."

Widower Ralph, with five children, said he had no choice but to take out a Provident loan even though he did not want to. He stated: "It was scary and it kept me awake at night."

Gary, 47, who has a wife and two children, commented that the loan was a necessity: "I would rather not borrow at all but I have to, just to stay alive."

In response to this, Provident Financial insisted that its loans were "much valued" and 95% of its borrowers were satisfied with their services.

However, Martin Narey, chief of Barnardo’s warned: "The poorest families are bearing the brunt of the recession. Typically, they have no savings, nothing to fall back on, no relatives or friends to help and in desperation they take out loans with huge interest charges, the repayment of which plunges them into deeper poverty.

"Such families, without spare cash to meet unforeseen difficulties, need access to affordable credit."

Time for a change

Child poverty is being brought up in a household with an income less than £13,500 a year. Therefore, Mr Narey has urged ministers to live out their promise to halve child poverty by 2010.

However, the Government answered that it was unlikely to meet the target. The guarantee was made in 1999, when 3.4 million children were living below the breadline, and way before the financial downturn took its hold over the country.

Despite this, Mr Narey said that the Government could still do more to help the situation: "There is still time for the Government to honour its historic pledge. Failure to do so will simply send more families into unmanageable debt."