Ministers' attempts to turn neighbour against neighbour in a bid to drive through the one per cent benefits cap are a "stain on our society", says the Public and Commercial Services Union (PCS).
The comments came in the wake of today's second reading in the House of Commons of the Benefits Uprating Bill, which has been widely condemned by charities and welfare experts.
MPs rejected an opposition bid to block the proposals by 328 votes to 262 after five hours of heated debate, with just four Liberal Democrats rebelling.
"It is a myth to say that welfare reform is about tackling worklessness. It is an assault on low income working families," said Labour MP Karen Buck during the Westminster debate.
Ian Mearns MP, who last month annoyed Work and Pensions Secretary Iain Duncan Smith by reading out a suicide note from a disabled constituent who had been taken off benefits, added: "This bill is another example of the government demonising and punishing the most vulnerable in our society."
Brighton Pavilion Green MP Caroline Lucas dubbed it "a means and miserable bill from a mean and miserable government."
Nothing in the benefits uprating bill debated by MPs today (8 January 2013) helps more people find work or increases low wages, says PCS - despite these being the best ways to reduce welfare spending.
The union, which represents 80,000 Department for Work and Pensions staff, "opposes all cuts to benefits and tax credits and utterly condemns the language used by politicians and sections of the media to describe people who rely on welfare support."
PCS says the country should be proud of the welfare state and the support it provides, and the government should be looking at how to improve it - including restoring the link between benefits and average wages, broken by the Conservatives in the 1980s, as well as paying people who are in work a living wage.
PCS also wants Labour should drop its "critical friend" approach to the coalition's welfare policy, and it is asking shadow ministers to speak up for people who are out of work as well as those receiving in-work benefits.
The comparison between benefits and wages is unfair and misleading, the union and many other critics point out. The main unemployment benefit has dramatically fallen in value from just under 21 per cent of average wages in 1979 to 11 per cent now. At 21 per cent, jobseekers allowance would be £135 a week today, instead of just £71.
Capping unemployment benefit at one percent would mean a 71p a week increase, whereas a one per cent rise in the average UK wage equates to an extra £5.01 a week.
Meanwhile the cost of living is soaring. The average household weekly food bill increased by 7.3 per cent last year, according to consumer group Which?, and Department for Environment, Food and Rural Affairs economists estimate the average cost of a weekly shop will go up by 4 per cent a year until 2022 at least.
Gas and electricity prices have recently risen by up to nine per cent and rail fares have increased this month by four per cent.
PCS general secretary Mark Serwotka commented: "No one really believes this bill is a serious attempt to help our economy; it is simply another shameful attempt to punish people on low incomes for a crisis caused by the recklessness and greed of wealthy bankers."
He continued "The campaign to demonise people who are out of work, in an attempt to turn neighbour against neighbour, is a stain on our society and we should be proud of our welfare state and seek to improve it."
Other NGOs are reacting to the Benefit Uprating Bill (BUB) debate. Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, said: “Today’s Bill is bad news for people living in poverty, whether they’re in work or out of work."
She continued: "Clearly, there are difficult decisions to be taken by Government, but Ministers’ opportunistic rhetoric on this issue is disturbing. Allowing today’s Bill to be presented as a choice between the ‘deserving and ‘underserving poor’ is both morally and economically wrong."
"As incomes fall and costs rise for people – whether they are in or out of work - we are at risk of entering a decade of destitution,” said Ms Unwin.
Matthew Reed, Chief Executive of The Children’s Society, said: "This bill will punish millions of children and families already struggling to make ends meet.
"Two-thirds of families affected – over six million – have children. As a result of today’s move, life will be harder for families from all walks of life, including 300,000 nurses and midwives, 150,000 primary school teachers and 40,000 members of the armed forces.
"Families already struggling to provide their children with food or a winter coat, or heat their homes are being pushed closer to the brink.
"Child poverty blights lives and is a scar on our society. Today’s ’hardship penalty’ punishes working families on low-incomes as well as those looking for work, paving the way to a rise in child poverty," he concluded.
* PCS: http://www.pcs.org.uk/ 
* Joseph Rowntree Foundation: http://www.jrf.org.uk/ 
* More about the Children's Society on Ekklesia: http://www.ekklesia.co.uk/ChildrensSociety