Almost one in seven Australians are living below the poverty line.
And the Australian Council of Social Service fears that federal budget measures will make it worse.
ACOSS has released a report revealing poverty is growing in Australia, with an estimated 2.5 million people, or 13.9 per cent, living below the internationally accepted poverty line.
It also found 603,000, or 17.7 per cent, of all children are living in poverty.
"This is alarming and highlights the need for a national plan to tackle the scourge of poverty which diminishes us all in one of the wealthiest countries in the world," ACOSS CEO Cassandra Goldie said on Sunday.
"This finding brings into focus the sheer inadequacy of these allowance payments, which fall well below the poverty line."
Dr Goldie said there were two critical ways government policy could alleviate poverty: housing and basic income support.
"Thirty-six dollars a day is not enough security - there is a real risk of poverty while struggling on the Newstart allowance," Dr Goldie said.
The poverty line for a single adult is $400 per week yet the maximum rate of payment for a single person on Newstart is $501 a fortnight.
When Rent Assistance and other supplementary payments are added, it's only $303 per week.
That's $97 per week below the median income poverty line.
The report found those most likely to be living in poverty are people who are unemployed (61.2 per cent) and those in households that rely on social security as the main source of income (40.1 per cent), particularly on Newstart.
Dr Goldie said the report emphasised dangers in the federal budget, including plans to reduce indexation of pension payments.
"(This) is likely to result in higher poverty rates over time," she said.
"These overall findings are a wake-up call for us as a community and shine a spotlight on the current policy direction of the federal government.
"It provides an opportunity for the government to work with the whole community to reconfigure its first budget and national policy priorities around the urgent need to address poverty in Australia."