The poorest families in Scotland families stand to lose more than £500 a year as a result of George Osborne's controversial Budget changes, according to new research.

The average household will also be more than £200 a year worse off by 2020, analysis by the newly launched IPPR Scotland think tank found.

The impact on Scots follows the first solely Conservative Budget in 20 years.

Mr Osborne was hailed a hero by some in his party when he announced a new National Living Wage, set to rise eventually to £9.

But the Chancellor is under intense pressure from some of his own MPs to scrap or amend his planned cuts to tax credits, also outlined in the Budget, amid warnings that their constituents will be hard hit.

Prime Minister David Cameron defended the changes a week ago saying that they would leave people better off.

But experts challenged that claim saying that overall the announced tax, tax credit and benefit reforms would leave households worse off.

The Conservatives pledged to cut billions of pounds from the UK's welfare bill in the run up to May's General Election.

The party insists that the changes are necessary to help clear the Budget deficit.

The IPPR Scotland analysis found that the poorest 20 per cent of Scottish households would lose an average of £520 per year by 2020.

On average households will be £210 a year worse off in five years, with the hardest hit expected to be lone parents, forecast to lose more than £1500 a year.

Couples with children will also lose an average of £540 a year.

But the analysis also found that those in the top 20 per cent of Scottish households will gain £110 a year.

A greater number of Scottish households - 1.3 million – will benefit from the Budget than the 800,000 that will lose out.

But they stand to see gains of around £170 a year, while those who see a drop in income will lose an average of £830.

IPPR Scotland said that its analysis showed that the new National Living Wage and planned tax cuts are "vastly outweighed" by the reductions to tax credits.

Russell Gunson, director of IPPR Scotland, said: “This is the first time that a tax and benefit analysis of George Osborne’s budget has been applied to Scotland and it shows his decisions will have a huge impact on the poorest in Scotland. Over 800,000 households will be worse off, with some losing over £500 per year. We have heard a lot about the positive impact of the rising National Minimum Wage, but for low and middle income Scottish families this is vastly outweighed by the negative impact of tax credit reductions."

He added: “This may be a decision that was made in Westminster, but how it can be reversed in Scotland is a clear challenge to the whole of the Scottish Parliament. As we look ahead to the Scottish Parliament making its spending decisions over the coming months, everyone must have the effects of these decisions, and in-work poverty more generally, in the forefront of their minds.”

SNP MSP Kevin Stewart said: “These new figures confirm that George Osborne’s summer budget will hit the poorest hardest, with the poorest 20 per cent of households in Scotland losing £520 per year compared to a gain of £110 for the top 20 per cent.

“Despite the Chancellor’s Living Wage con-trick 800,000 people will lose out because of his callous social security cuts – and those who will benefit are concentrated amongst the top 40 per cent of earners.

“The SNP government is providing almost £300 million over three years to mitigate Tory welfare cuts and has pledged to use new powers to be devolved to build a fairer social security system."

A Treasury spokesman said:

"We’re determined to deliver a new settlement for the British people, one that will create a higher wage, lower tax and lower welfare economy.”

“The reforms to welfare set out in the Summer Budget are fair and necessary, and will take tax credit spending back only to 2008 levels, with most working households better off once all welfare reforms have come into force by 2017.

"But there's more to be done. That’s why we are introducing a new National Living Wage which the independent OBR expect will benefit up to 2.7 million people directly, with up to 6 million seeing their pay rise as the knock-on effects are felt higher up the earnings scale. Together with the further increases to the personal allowance next year, this will mean people will keep more of the money they earn by paying less income tax.

"We’re also taking action to support working families by freezing fuel duty, helping councils to freeze council tax bills and offering thirty hours of free childcare to all working parents, because evidence shows that the best route out of poverty is work, not benefits. It’s all part of our long term plan."