The gap between the richest and poorest UK regions is set to widen under the Coalition's "winner takes all" economic strategy, a report has claimed.
Government growth policies are geared to rewarding already successful areas and will hasten the decline of deprived towns and cities, according to the Work Foundation think tank.
It warned of "serious social and economic" consequences unless the ministers begin to target funding at the poorest communities.
Report author Lizzie Crowley said: "While the government has committed itself to rebalancing the UK economy, their current hands-off approach is set to have quite the opposite effect. Current policies are likely to exacerbate regional economic differences via a 'winner takes all' approach, with poorer areas left to further decline.
"Doing nothing about deprived communities is not an option. The resulting economic decline is likely to bring about serious social and economic costs for individuals, local areas and national government.
"On the one hand, we need measures that allow more people to benefit from those areas that are more successful. But at the same time, we need targeted measures to ensure that struggling areas are not left without any support."
According to the report, policies such as Business Rates Retention, which allows councils to keep a proportion of the levy instead of handing it over to the Treasury, will contribute to the increasing divide. The government admits the policy will benefit wealthier authorities but insists it poorer authorities will benefit from top up payments.
It also raises concerns there is no national programme aimed at regenerating the most deprived communities for the first time in 40 years and claims regeneration funding was halved in the last financial year.
The report calls for government to make it easier for more people to benefit from economically successful areas by boosting affordable housing and transport networks.
It urges the government to give greater funding and powers to Local Enterprise Partnerships and creating a Challenge Fund to plough money into projects targeted at the most deprived communities.