Despite positive signs in the wider economy more than 800,000 households are now worse off than they were 12 months ago.

Labour leader Ed Miliband has made much noise about the cost of living crisis in recent weeks and this survey blames rising household bills for the worsening circumstances.

London is home to most families struggling to pay household bills with 721,000 falling into this category while the East Midlands region has suffered most in the past year with 304,000 extra homes struggling compared to this point last year.

Just 40% of participants in the survey described their situation as stable with money left over at the end of the month.

John Pollock, chief executive officer, Legal & General Assurance Society said; “The reality of the UK today is that people are worse off despite the recovery in the economy, falling unemployment and lower inflation.

“Not only are we seeing that over 800,000 more households are struggling to make ends meet compared with last year, but our latest research shows a fall in the number of homes who can afford to save compared to a year ago.

“The rising cost of fuel is likely to wipe out any benefits from falling prices for other goods and make balancing household finance even harder, especially for those with lower incomes. With one-in-three (34%) already saying they are in fuel poverty the amount spent on fuel is likely to have a significant impact on how the less well off households cope with paying bills over the coming months.”