The Resolution Foundation said Universal Credit could leave 2.5 million families worse off, some by more than £3,000 a year.

The warning comes as the UK government announces a further expansion of the scheme including jobcentres in Arbroath, Blairgowrie, Forfar, Montrose and Perth.

The rollout has been hit with delays and full implementation is now expected to be in place by 2021.

Over 450,000 people have made a claim to Universal Credit so far, with over 9,500 new claims made every week, according to the Department of Work and Pensions (DWP).

Universal Credit is designed to replace Jobseeker’s Allowance, Income Support, Tax Credits and Housing Benefit with a simpler single payment, but the Resolution Foundation has said the scheme has “veered off track” from its original intention in the face of cuts to the welfare budget.

“UC now has serious design flaws that must be resolved before the rollout is complete,” the think tank said in a statement.

The scheme’s architect Iain Duncan Smith resigned from the government over what he called pressure to “salami slice” welfare.

The Resolution Foundation called for his replacement at the DWP Stephen Crabb to “reclaim” the plans from the Treasury.

David Finch, senior economic analyst at the Resolution Foundation, said: “It is a reform with lots of potential, but it has veered off-track over recent years, particularly following a series of sharp cuts in support to working families.

“With UC’s main goal of making work pay now under serious threat, the Secretary of State should reclaim the project from the Treasury. Three steps are key.

“He should prioritise support on those most likely to respond such as single parents and second earners, ensure UC does more to help those already in work to progress, and iron out some of the practical concerns that have arisen during the initial pilots.”

Mr Crabb said the payment was “transforming welfare” and getting people into work faster.

He said: “Universal Credit is transforming welfare and is central to our vision for our society where people of all backgrounds can earn a decent wage and provide for their families, with claimants moving into work faster and earning more than under the old system.

“Our focus now is on continuing its expansion to all claimants,” he said.