A report for the Joseph Rowntree Foundation found that while the number of impoverished children dropped overall to 3.7 million, the majority are now from homes where a parent or carer is working, accounting for 58% of the total.
The number who live in workless households fell to 1.6 million – the lowest figure since 1984 – according to the Monitoring Poverty and Social Exclusion report.
The co-author of the report Tom MacInnes said: "With more than half of all children in poverty belonging to working families, it is simply not possible to base anti-poverty policies on the idea that work alone is a route out of poverty.
"Child poverty in working households must be given the same focus as out-of-work poverty. Until this happens, debates about poverty will continue to be misleading."
MacInnes said the overall fall was "almost certainly" related to the rise in child benefit and child tax credit in 2008.
He said: "The fall in child poverty among those in out-of-work households came about despite an estimated rise of 60,000 in the number of children living in workless households over the year ... Without the substantial increases in these benefits, the numbers of children in poverty would be around half a million higher."
Save the Children's head of UK policy, Sally Copley, said: "Making work pay is the government's rallying cry, but today's report shows that for a record 2.1m working families, work doesn't pay enough to keep them and their children above the breadline. The danger is that cuts to working tax credit and childcare support will further penalise working families already struggling to make ends meet."
The report also found that between 2008 and 2009, 13 million people in the UK were living in poverty.
guardian.co.uk © Guardian News and Media Limited 2010
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