SCOTTISH families with young children are becoming considerably poorer, with a high number unable to afford basic essentials, according to a major research project commissioned by the Scottish Government.

The study Growing Up in Scotland (GUS) found more parents with children born in 2010/11 were living on a household income of less than £10,833 in real terms than families with babies born in 2004/5. The findings emerged last month after a team of social scientists completed their latest round of the study.

The project, launched in 2003, focuses on the lives of two groups of children. The first, "birth cohort one' (BC1) is made up of 5217 children born in 2004/5 and the second, "birth cohort two" (BC2), of 6127 children born in 2010/11. Both groups will be followed through childhood and into adolescence.

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In most cases interviews were carried out the year after the child was born, when he or she was about ten months old, to give a snapshot view of the families at two moments.

Each of the two cohorts were drawn from a wide cross-section of society, both geographically and in terms of their parents' social background, income and education.

The researchers found that while in the first cohort, 21% of families – or about one in five – were in the lowest income group of less than £10,833, in the second cohort that had risen to 27%, or more than one in four.

In addition, fewer families were in the highest income bracket with a household income of more than £40,624. In BC1, 19% of families were in the wealthiest group, while for BC2 the figure had dropped to 13%.

Across all of those questioned, 37% in the second cohort said their financial situation had worsened over the last six years.

"After taking account of inflation, the data suggest that families in 2011/12 have lower incomes than families with young children in 2005/6," wrote one of the report's authors Paul Bradshaw, of ScotCen Social Research.

The report also found 37% of the poorest families suffered from severe material deprivation, struggling to heat their homes in winter, save for the future or afford contents insurance for their homes.

John Dickie, head of the Child Poverty Action Group in Scotland, said the income fall was probably due to people losing their jobs or having to work fewer hours following the financial crisis of 2008.

He added the report was "extremely worrying" as the research was carried out before the implementation of welfare reforms.

"At the same time as families have seen stagnating wages, or too often losing jobs or working fewer hours because of the recession, the welfare protection which has been there in terms of tax credits and benefits is now being dramatically reduced," said Mr Dickie.

"All the forecasting and modelling of the consequences of welfare cuts and wider tax and benefit policy is that we are going to see a massive explosion in levels of child poverty."

"What the GUS figures show is that even before these cuts and policy changes take effect, the pressure has been mounting on families."

Douglas Hamilton, head of Save the Children in Scotland, added: "This is a financial and societal crisis that is developing beneath the radar.

"Too many babies and young children are growing up in families that are struggling to provide the basics, and we are seeing an increasing reliance on charities to meet those needs.

"These figures highlight that current policies are having a devastating impact on families with young children, and that action needs to be taken to protect the incomes of the poorest families and provide the support to those families worst affected."

The report showed the wider problems that poverty can cause in terms of a child's health and emotional development.

Mothers in the lowest income groups were more likely to have babies with a low birth weight, and were more prone to health problems themselves. It also found the difficulties presented by parenting in disadvantaged circumstances were more likely to leave parents stressed and less likely to take part in activities vital to a child's development such as reading, singing and visiting friends with young children.

A Scottish Government spokesman said: "We are committed to getting people out of poverty, especially in the current difficult economic circumstances.

"We have prioritised ongoing investment in the early years, including £18 million to increase accessible support for families."