Campaigners have called for the government to scrap the “nasty” two-child limit on benefits after the latest official figures showed that nearly 600,000 children were affected by the controversial policy.

Although the government promoted it as a way to persuade people into work, Department for Work and Pensions (DWP) statistics published on Wednesday show those most affected by the limit were working families. Of the 161,000 households affected since the policy was introduced, 59% had at least one adult in work.

The limit means restricts the child allowance in universal credit and tax credits – worth £2,780 a year – is only paid for the first two children in a family. It does not affect children born before April 2017.

Ministers promoted the policy as a way to make households take responsibility, by teaching them that “children cost money” and discouraging them from having a third child.

Research published earlier this year found nearly all families affected by the limit – which leaves them £53 a week worse off – had cut back on essentials such as food, medication, heating, clothing, as well as after-school clubs. Some parents said they had considered having terminations when they discovered the policy after getting pregnant.

The Conservative peer Philippa Stroud, a former adviser to the former work and pensions secretary Iain Duncan Smith, said ministers should consider scrapping the policy if current trends showing a rise in poverty among families with at least three children continued.

Lady Stroud chairs the independent cross-party Social Metrics Commission, which this week published its latest poverty analysis. This highlighted a nine percentage point rise in larger family poverty since 2014.

She said this was not just the result of the two-child cap, which only came in two years ago, but added: “Given the increase in poverty already seen for families with three or more children, it is important that policymakers monitor the impact of the two-child policy carefully, and are willing to reconsider the policy approach if the data shows it is increasing poverty among larger families.”

Alison Garnham, of the Chid Poverty Action Group (CPAG), said: “Every child deserves a good start in life, but today’s figures are a grim reminder of the human cost of this nasty policy, which says that some children are more deserving than others purely on the basis of their birth order – and which mostly affects working families.

“In the UK we would never turn a third-born child away from school or hospital. How can it be right to deny the same young children the support they need to enjoy a childhood free from poverty when their family falls on hard times?”

Just 4% of families received an exemption from the two-child limit, mainly on the basis that the third child was the result of a multiple birth. There were 510 exemptions under the “rape clause” – when the mother proved to officials that the child had been born as a result of rape.

There is concern that the policy will exacerbate a dramatic rise in families with at least three children moving into poverty since 2014 – a nine percentage point increase that is yet to take into account the effect of the two-child policy. According to the CPAG, it will plunge about 300,000 more families into poverty by 2024, by which time 1.8m children will be affected.

In a letter to the Times on Wednesday, 109 social policy academics said the policy was “quite simply one of the most damaging changes to the social security system ever”. It had delivered “unprecedented cuts to the living standards of the poorest children in Britain”.

The Scottish National party MP Alison Thewliss said: “Across the UK, the majority of those who have been affected by the two-child limit are in work and receiving low income, highlighting the inaccuracy of the UK government’s position of pitting working people against those on benefits.”

A government spokesperson said: “This policy ensures fairness by asking families receiving benefits to face the same financial choices as families supporting themselves solely through work. Safeguards are in place and we’ve made changes this year to make the policy fairer.”