Edinburgh is exposed as "a city divided" in a report that shows that despite average incomes being 9% above the rest of Scotland, one in five households is living below the poverty threshold.
The poverty line is measured at £125 per week if people are single, £258 if they are a single parent family and £349 for a couple with two children.
The report will go before Edinburgh City Council next week and is designed to help end inequality by shaping future policy on reducing poverty.
However, the statistics prompted an angry reaction from the city's Green Party group, which called for urgent action to close the wealth gap.
The Scottish capital is described as a "dual city" in the research, which was compiled over the last year.
It comes amid growing concerns over people living in abject poverty around the country, with rising numbers of families seeking help from food banks.
The report says one in five households in Edinburgh cannot afford items regarded as essential for an adequate standard of living.
Maggie Chapman, equality spokeswoman for the Green Party group at the council, said the authority had promised more than a decade ago to move to halt such poverty.
She said: "Edinburgh is a very wealthy city, but the poverty experienced by many shows how very unequally this wealth is distributed.
"We really need proper wealth redistribution to improve the lives of thousands of people in Edinburgh, hundreds of thousands across Scotland.
"It is no longer enough to tinker round the edges of a system that clearly does not work for so many people.
"There is a limit to what Edinburgh can do, on its own, to improve equality; national systems for taxing the wealthiest and dealing with corporate tax-avoiding have to change."
She added: "Fourteen years ago the Lord Provost of the city launched what was billed then as an ambitious but realistic blueprint to tackle social exclusion.
"With the gaps between rich and poor having widened since, we must, urgently, rediscover our appetite for action against poverty."
The report also found 18% of children in the capital live in low income households and this equates to a total of some 17,600 young people.
The report stated: "The average figures mask considerable levels of inequality across the city.
"In the most deprived areas of Edinburgh, the proportion of households living below the poverty threshold rises to 33%, compared with a city average of 22%. A significant number of the city's residents have been receiving benefits for five years or more."
The top 10% earning residents in the city earn an estimated average £1000 per week compared to only £134 per week among the lowest-earning 10% of workers.
The report said: "In other words, the top earning group of Edinburgh residents earn over seven times as much from employment as do the lowest earning group."
Ricky Henderson, the city's health and social convener, said: "Edinburgh has an image of affluence, but this report highlights the appalling fact we are a divided city, where people live quite different lives side by side - alongside great wealth, many people here are living in poverty and experience an unacceptable standard of living.
"This council is committed to fighting deprivation and inequality and works closely with communities and partners such as health services, the voluntary sector and the police to find the best way to do this. It is vital private sector and commercial companies are willing to join this effort."