London - The gap between rich and poor in Britain is the widest for 40 years, with a growing number of people living below the poverty line, a report said on Tuesday.
There is also increasing segregation of the wealthy and the less well-off, with rich people in London and southeast England sometimes completely cut off from poverty, it said.
"Poor, rich and average households became less and less likely to live next door to one another between 1970 and 2000," said the report by the Joseph Rowntree Foundation.
"As both the poor and wealthy households have become more and more clustered in different areas, so the spatial concentration of average households has also increased," added the study, which compares data from 1968 to 2005.
The findings come after a decade-long economic boom under the government of former Prime Minister Tony Blair, whose Chancellor Gordon Brown succeeded him in the top job last month.
The boom has notably seen house prices soar, in particular in the capital, making homeowners spectacularly wealthy but leaving others, particularly young people, locked out of the property market.
The report noted a reduction in the number of people living in extreme poverty, but the overall numbers living below the poverty line has increased with over one in four households classed as being "breadline poor" in 2001.
In some cities over half of all families are below the poverty line.
The richest people are increasingly clustered on the outskirts and suburbs of major towns and cities, the report said.
Rich people own an increasing share of wealth, it noted: in 1991 the wealthiest one percent of the population owned 17% of the nation's wealth, rising to 24% in 2002.
The report's author Michael Orton said the widening wealth gap could cause social tensions.
"There is widespread acceptance that some occupations should be paid more than others: but the gap between high and low paid occupations is far greater than people think it should be," he said.
Employment and Welfare Reform Minister Caroline Flint said that the rising trend of inequality has recently stabilised.
But David Laws of the opposition Liberal Democrats said "this report shows that Britain is becoming a more polarised society with growing inequality of wealth, geographic concentrations of deprivation, and falling social mobility."
David Davis, the home affairs spokesperson for the main opposition Conservatives, lamented the lack of opportunities for the least well-off.
"Not only is this a loss of opportunity for young people and a tragedy for families and individuals trapped at the bottom of the pile - it is also a massive loss of talent and creativity for our nation."