The Australian Community Sector Survey 2011 released on Monday showed one in 20 people, around 345,000, who sought social services among the 745 organisations were turned away in 2010-11.
This represented a 19 per cent rise compared to 2009-10 with people turned away from services including homelessness and housing projects.
The demand for services increased by more than the 12 per cent in assistance provided by agencies, the report said.
Australian Council of Social Services (ACOSS) chief executive Cassandra Goldie said the report highlighted the disconnect between the impact of the global downturn in 2008 and the data indicating an improving Australian economy.
"The increasing number of people turning to the community welfare sector reflects the steep lag effects of the GFC, suggesting that the benefits of economic recovery have been
unevenly distributed," Dr Goldie said in a statement on Monday.
"It also reflects the gross inadequacy of basic social security payments, particularly for those who are not in paid work and the growing cost of living pressures more people are under, especially to keep an affordable roof over their head."
"This is borne out in the survey with nearly 50,000 instances in which people were turned away from homelessness and housing services, which equates to a total of 135 people turned away from these services on any given day in 2009-10 (22 per cent increase on 2008-09)."
Dr Goldie said this was a "worrying picture".
"It highlights the urgent need for sustained action to ensure people can have at least adequate income support and assistance to tackle the roots of disadvantage, as well as support for the vital sector that is crucial to supporting people and preventing further disadvantage."
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