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Figures to be published today are expected to show that the Government failed to meet its statutory target to halve the problem by 2010 – despite the huge amount of taxpayers’ money spent on tackling it.

Mr Duncan Smith will unveil a new analysis which will show that hundreds of thousands of children will be lifted out of poverty if at least one of their parents works 35 hours a week earning the minimum wage.

The introduction of the universal credit, under the Government’s welfare reforms, will mean that people returning to work from benefits will continue to receive some state support.

Any child living in a household which earns less than 60 per cent of the typical income is defined as living in poverty. This is likely to be changed so that children living in workless households or those with drug-dependent parents are highlighted.

Mr Duncan Smith will also set out plans to change the definition of child poverty so that a more sophisticated analysis is used.

Speaking ahead of his speech at the Abbey Community Centre in London, Mr Duncan Smith told BBC Radio 4's Today programme: "What I'm talking about is getting away from a system that got so trapped in the idea of meeting a relative income target so narrowly that more and more money was spent on welfare but keeping people out of the work process.

"What we need to do is make sure we tackle poverty but tackle it in the process of trying to move them on (to work).

"If you just measure relative income levels you know nothing about what's happening to the family."

In his speech, he will accuse Labour of “pouring vast amounts of money” into increased benefit payments to tackle poverty. He is expected to say that the strategy has failed and parents need to be helped back to work rather than simply subsidised by the state.

He will say: “Getting a family into work, supporting strong relationships, getting parents off drugs and out of debt — all this can do more for a child’s wellbeing than any amount of money in out-of-work benefits.

“With the right support, a child growing up in a dysfunctional household, who was destined for a lifetime on benefits could be put on an entirely different track — one which sees them move into fulfilling and sustainable work. In doing so, they will pull themselves out of poverty.”

He will add: “Our latest analysis suggests that universal credit will ensure the vast majority of children will be lifted out of poverty if at least one parent works 35 hours a week at the minimum wage — or 24 hours if they are a lone parent.

“For those who are able to work, work has to be seen as the best route out of poverty. For work is not just about more money — it is transformative. It’s about taking responsibility for yourself and your family.”

Mr Duncan Smith will indicate that Labour wasted large amounts of public funds as it failed to halve child poverty. “The last Government spoke about the need to tackle poverty, and poured vast amounts of money into the pursuit of this ambition — £150 billion was spent on tax credits alone between 2004 and 2010.

“Overall, the welfare bill increased by some 40 per cent in real terms, even in a decade of rising growth and rising employment,” he will say.

Ministers are drawing up plans to introduce a series of measures to gauge whether families are living in poverty, such as whether parents have drug or alcohol problems or whether they are working.

In today’s speech, the Work and Pensions Secretary is expected to defend the need to change the definition of child poverty. “If a family has less than 60 per cent of the median income it is said to be poor, if it has 60 per cent or more it is not,” he will say.

“By this narrow measure, if you have a family who sits one pound below the poverty line you can do a magical thing. Give them one pound more, say through increased benefit payments, and you can apparently change everything — you are said to have pulled them out of poverty. But increased income from welfare transfers is temporary if nothing changes.”

Mr Duncan Smith’s call for disadvantaged families to return to work may come at an inopportune time with unemployment rising as the double-dip recession has led to a lack of jobs.

William Hague, the Foreign Secretary, caused controversy recently by telling Britons they had to work harder to help the UK escape from recession.

Spain is caught in a vicious downward spiral as the property crash accelerates, further undermining the banks and state finances. This in turn is drawing Italy into the fire and threatens to overwhelm the EU's rescue machinery.

"We must have a real circuit breaker," said Sondergaard. "The question is whether the ECB will now blink and go down the route of quantitative easing (QE)".

He said the ECB should slash interest rates by half a point to 0.5pc and "pre-commit" to half a trillion euros of QE over coming months, blanketing the Spanish and Italian bond markets.

Nomura said the ECB must act with overwhelming force rather than engaging in piecemeal bond purchases that fail to restore confidence and have the toxic side-effects of pushing existing bondholders down the credit ladder -- the dreaded effect of "subordination".

"The eurozone has the wrong policy mix across the board. Fiscal policy is too tight; monetary policy is too tight; and the tough regulation of the banks is coming at the wrong time. Together it is all pushing the eurozone to breaking point," he said.

Spanish premier Mariano Rajoy said in a private letter to EU leaders last week that the ECB is the only body with firepower and nimbleness able to contain the crisis at this point.

The pleas have so far fallen on deaf ears in Frankfurt where ECB hawks insist that any such intervention to help EMU's struggling debtors would reduce the pressure for root-and-branch reforms.

The bank said in its June report on Thursday that Spain must make further draconian cuts to meet its deficit target of 3pc of GDP next year. It enraged monetarists by denying yet again that the eurozone faces a serious monetary slowdown or "an abrupt and disorderly adjustment" for banks -- or a credit crunch in layman's language.

"It shows fantastic complacency. They are not complying with their own mandate," said Professor Tim Congdon from International Monetary Research. Critics say that all key measures of the eurozone money supply are now contracting, pushing the whole region into deeper slump. The ECB has missed its 4.5pc growth target for M3 `broad money" by a wide margin.

Mr Spiro said the fast-escalating crisis in Italy may force the ECB to act. Foreigners own half Italy's €2 trillion public debt and they are increasingly shocked by the failure of the EU authorities to halt contagion. "Foreigners haven't been buying Italian bonds, but most have not been selling either. The risk is that they will now start selling en masse," he said.

"Italian banks are under massive financial repression to buy the debt but they are running out of money. The ECB will have to act but it has lost so much credbility already that it will have to buy on a massive scale to make a scrap of difference."

The ECB has already bought over €200bn of Italian, Spanish, Greek, Irish, and Portuguese bonds, justifying it as necessary to ensure the proper "transmission" of monetary policy. The move caused a storm in Germany, prompting the resignation to both German members of the ECB board last year. A chorus of economists have exhorted the ECB to cap Spanish and Italian yields at 5pc or so by pledging unlimited intervention. Yet such a naked rescue of insolvent states would trigger legal challenges in the courts for breach of the EU's no-bailout clause.

Professor Paul De Graue from the London School of Economics said the bank should go ahead anyway and "let the lawyers argue about it for the next ten years."

There are no such constraints on outright QE or money printing by the ECB, in extremis. Monetarists say the bank should buy the bonds of all EMU states to lift the entire region and prevent debt-deflation taking hold in the South.

Fresh data yesterday shows how desperate the crisis is becoming in Spain. The property crash is accelerating. House prices fell at a 12.6pc rate in the first quarter of this year, compared to 11.2pc the quarter before, and 7.4pc in the quarter before that. Prices have fallen 26pc from their peak.

"Fundamentals point to a further 25pc decline," said Standard & Poor's in a report on Thursday. It may take another four years to clear a glut of one million homes left from the building boom.

Mrs Merkel chided the country gently yesterday for letting a "property bubble" spin out of control in the boom years. Her words prompted a furious reaction from Madrid.

Foreign minister Jose Manuel Garcia-Margallo said Spain itself was the victim, flooded with cheap capital from northern European banks. "It is true that Spain and some other countries lived beyond their means but that was because banks from the core made lots of money investing here," he said.

His struggle to make ends meet exemplifies the plight of Greeks mired in a fifth year of recession. Yesterday the official unemployment rate rose to a record 22.6 per cent in the first quarter. But the hungry civil servant's attitude towards the general election on Sunday also typifies the polarized nature of the national debate.

The race has boiled down to choice between a coalition led by either New Democracy, the conservative establishment party, or Syriza, an insurgent Leftist coalition.

Vangelis will support the latter, as he did in a May 6 vote, when Syriza stunned the whole of Europe by coming second and then confounded attempts to form a national unity government, so requiring Sunday's fresh election. New Democracy, however, led narrowly in the last public opinion polls before they closed on June 2 under Greek law. Private polling since has shown a similar trend.

The stakes could hardly be higher. The vote has been presented as a de facto referendum on Greece's membership of the euro because of the pledge by Alexis Tsipras, Syriza's 37-year-old leader, to revise the second memorandum of understanding between and international institutions and lenders, which contained the toughest austerity measures and brought riots to the capital's streets.

His demands include a three to five year moratorium on Greece's interest payments, a rapid recapitalisation of the country's banking system and a restoration of unemployment benefit and the minimum wage to pre-crisis levels - reforms that were required by the memorandum.

Though Mr Tsipras has given himself some wriggle room, by not committing to a unilateral cancellation of the agreement, his critics claim that his demands would be so inflammatory that Berlin and Brussels would soon give up on the Greeks. The next tranche of Greece's bailout funding would then be withheld, so hastening its exit from the euro.

Officially, Mr Tsipras is committed to staying in the currency, though the same cannot be said for all the members of his coalition. But his gamble is that German leaders are bluffing when they say that a Greek exit from the euro would be manageable.

Like many Greeks, he reckons that although his country is small enough to represent just two per cent of the eurozone's output, it is big enough to be the first domino that starts the collapse of the single currency.

He is hoping that supposed disillusion in Europe with austerity will work in his favour and loosen the creditors' grip on the Greek economy.

"Tsipras is trying to convince people that we can stay in the euro with him in charge," said Spiros Rizopoulos, head of Spin Communications, a consultancy in Athens. "But if he thinks Angela Merkel is going to back down – well, he can say that, but I can say I am Brad Pitt, but am I am not Brad Pitt."

Greek bank shares rose 19pc yesterday, bucking European trends on market talk that broadly pro-bailout parties are likely to prevail on Sunday.

But few people will vote with enthusiasm for New Democracy. Its 61-year-old leader Antonis Samaras is seen by many Greeks as part of the corrupt old guard responsible for what Wolfgang Schaeuble, the German finance minister, this week called "decades of economic mismanagement".

Though Mr Samaras says he wants to renegotiate the memorandum, his demands would be minor compared to those of his rival Mr Tsipras.

Neither however has presented a convincing vision for rebuilding Greece's sclerotic bureaucracy and lack of competitiveness.