The government has warned almost 60,000 working people they could lose out after impending changes to Universal Credit.
Labour say the changes to the work allowance part of the controversial benefit, which is being rolled out to replace Tax Credits , could end up costing 2 million working families £1,600 a year over the net five years.
Shadow Work and Pensions Secretary Owen Smith said the changes "penalise work."
The new benefits system is supposed to be streamlined and reward those who take on more work.
But the Mirror revealed this month a single parent with one child earning £9 an hour on tax credits would notice a significant drop in their income if they switched.
The work allowance is the amount of income Universal Credit claimants can earn before their benefits are tapered away.
George Osborne's 2015 budget set out plans to reduce the income threshold for this taper.
A single parent not claiming for housing costs will see the threshold almost halved from £734 a month to £397 a month.
Senior economic analyst David Finch said Universal Credit is “a world away” from what was originally intended.
He said: “Some single parents claiming UC could find themselves £29 a week worse off compared to what they would have received under tax credits. They’d have to work another 11 hours a week to get this money back.”
Shadow Work and Pensions Secretary Owen Smith said: “By writing to sixty thousand workers telling them they’re about to be made worse off, Stephen Crabb has put his name firmly and squarely on the Tories’ cuts to Universal Credit.
“Instead of cancelling the cuts as he should have done, he’s rubber-stamped changes that penalise work, hitting low and middle-paid workers the hardest.
“Over the next five years, Crabb’s cuts to Universal Credit will make more than two million working families worse off by around £1,600 a year.
“Rather than writing to those unlucky enough to be on Universal Credit and not tax credits, he should have seen the devastating impact these cuts will have and reversed them full.”
The Department for Work and Pensions admit they contacted some 59,000 people, but say they expect the actual number of people affected to be significantly lower.
Read more:Around 1.25 million people living in Britain are classed as destitute, shocking new survey finds
A spokesperson confirmed they had written to all Universal Credit claimants who were reporting income to DWP at the time, last month.
They said they wanted to deliberately "cast the net wide to ensure that no one is missed."