Over 150 families in Sheffield have had their housing benefit cut to 50p a week as a result of the Government's benefits cap, new figures reveal.
Nationally, more than 7,500 families have had their housing benefit cut according to figures obtained by the BBC's Panorama show.
The Child Poverty Action Group said that the £20,000 cap - £23,000 in London - on the total amount of benefits claimed by a household in a year targeted many people who were not in a position to work.
But ministers insist that it leaves claimants on a similar income to many working people and gives them an additional incentive to find a job.
Of the 370 councils which responded to Panorama's survey, Sheffield had one of the highest number of claimants whose housing benefit payments have been reduced to 50p a week, with 151 families affected.
In Birmingham, 578 families are on the 50p a week level along with 223 in Leeds and 179 in Manchester.
CPAG chief executive Alison Garnham said: "We reckon of the people affected by the benefit cap, about 80 per cent of them are not really in a category expected to work because they're sick or have very young children. So, there's an overall question about how this can be a policy about getting people into work, when the group that's targeted isn't really expected to."
Welfare delivery minister Caroline Nokes said: "You have to remember that a household that has only 50p of housing benefit actually is receiving in the region of £20,000 a year outside London, in total benefits. That's about the same as an ordinary family. Four in 10 families would be earning that sort of money."
A spokesman for the Department for Work and Pensions said: "We are committed to helping people into work if they are able, and the benefit cap provides a clear incentive to move into employment. Over 26,000 people who were previously capped have moved into work.
"Anyone eligible for working tax credits, carers allowance, and most disability benefits are exempt from the cap.
"The benefit cap restores fairness to the system and the new limit will ensure the amount people on out-work-benefits can claim better reflects the circumstances of many working families in the country."