The government claimed that it had lifted 1.2 million children out of poverty in its first term.
The director of the Child Poverty Action Group, Martin Barnes, said:
'Today's figures show that the reduction in child poverty was substantially less than was claimed before last year's election.
'Measuring poverty is not an exact size - the government was wrong to have presented a prediction as a proven fact. When Tony Blair pledged to eradicate child poverty the government very firmly nailed its colours to the Household Below Average Incomes measure. If the government now moves the goalposts in using a different measure of poverty, its risks losing credibility.
'The figures are very disappointing and underscore the need for more to be done to tackle income poverty.
'The chancellor must put the reduction of child poverty at the centre of next week's Budget. The government's pledge to lift one million children out of poverty within the next three years can only be achieved by significantly improving the incomes of low-income families.
'The new child tax credit, due next year, can be the vehicle to ending child poverty. Lifting one million children out of poverty will require additional support for families of over£5bn a year.'
In 1996/97 4.4 million children were living in poverty after housing costs - today's figures show that 3.9 million children were living in poverty in 2000/01.