Britain's deep social mobility problem is getting worse for an entire generation of young people, with middle income families now among those being left behind, the Government has been warned.
A growing sense of "us and them" is having a "deeply corrosive" impact on the country and governments have been too slow to respond, the Social Mobility Commission found.
Its annual report to Parliament warned that so-called treadmill families are running harder but are standing still.
People born in the 1980s are the first generation since the war not to start work with higher incomes than their immediate predecessors, and only one in eight children from poor families is likely to become a high earner when they grow up.
The commission found an "entrenched and unbroken" link between social class and success.
Professions are still overwhelmingly dominated by those from affluent backgrounds, with just 4% of doctors, 6% of barristers and 11% of journalists coming from working class backgrounds.
In the North East, not one child on free school meals went to Oxbridge after leaving school in 2010, it found.
The commission calls for a radical overhaul of education, employment and housing policies to tackle the gap.
Some three million homes must be built in the next decade to deal with the housing crisis, a third by the public sector.
But Prime Minister Theresa May's controversial plans to allow more grammar schools need a "rethink", it said.
Commission chairman Alan Milburn said: "The rungs on the social mobility ladder are growing further apart. It is becoming harder for this generation of struggling families to move up.
"The social divisions we face in Britain today impact many more people and places than the very poorest in society or the few thousands youngsters who miss out on a top university. Whole sections of society and whole tracts of Britain feel left behind.
"The growing sense that we have become an 'us and them' society – where a few unfairly entrench power and wealth to themselves – is deeply corrosive of our cohesion as a nation.
"As the EU referendum result showed, the public mood is sour and decision-makers have been far too slow to respond.
"We applaud the Prime Minister's determination to heal social division and foster social progress. That is a big ambition. It will require big action.
"Fundamental reforms are needed in our country's education system, labour market and local economies to address Britain's social mobility problem. That should be the holy grail of public policy, the priority for Government and the cause which unites the nation to action."
Mr Milburn said rather than the traditional north south divide, the gap was now between major cities and the rest of the country.
The new "geography of disadvantage" includes coastal areas such as Blackpool, Great Yarmouth and Minehead, and older industrial towns such as Mansfield and Stoke.
"The problem is not just social division, but a widening geographical divide between the big cities - London especially - and too many towns and counties across the country that are being left behind economically and hollowed out socially," the report states.
Theresa May swept into No 10 in July with a promise to lead a ''one nation'' government that works for all, not just the ''privileged few''.
The Prime Minister insisted that the Conservatives ''do everything we can to help anybody, whatever your background, to go as far as your talents will take you''.
A Government spokesman said: "We want to make this a country that works for everyone, not just the privileged few. Whether it's education, jobs, or housing, this means giving families more control over their lives - and doing more to help those who are just managing.
"As the PM said on the steps of Downing Street, this Government is committed to fighting injustice wherever it arises – and ensuring that everyone in our country has the opportunity to go as far as their talents will take them. We will consider the recommendations in the report."