Nearly 70,000 job seekers have had their benefits withdrawn unfairly, making them reliant on food banks, the right-of-centre thinktank Policy Exchange has said .

The intervention is the first by a respected rightwing voice claiming that something has gone wrong with the administration of benefits.

A chorus of churches, charities and Labour has been warning the work and pensions secretary, Iain Duncan Smith, for months that the administration of benefit sanctions has become too punitive.

Duncan Smith has commissioned a limited independent review into the administration of sanctions, and this is likely to confirm problems in the way they are imposed, but not challenge their level.

Policy Exchange says almost a third of all people who break their job search conditions for the first time have their benefits taken away by mistake and face unnecessary hardship as a result.

Guy Miscampbell, the author of the Policy Exchange report, said: "It is clear that there are a significant number of people who have their benefit taken away from them unfairly. Four weeks without any money is driving people to desperate measures including a reliance on food banks".

The report suggests: "With some 874,000 adverse decisions being made between October 2012 and September 2013, and over 146,000 of them being successfully appealed or reconsidered it is clear that the possibility of wrongly applied sanctions, and what their effects might be, is an important one. With some estimates suggesting that 43% of those referred to food banks are there due to benefit stoppage or being refused a crisis loan, it is clear that there is not currently an adequate safety net for those who are wrongly sanctioned".

The report comes as a public health specialist, Professor Elizabeth Dowler of Warwick University, said that poverty–stricken families who cannot afford to buy sufficient food are overtaking unhealthy eating as the most pressing public health concern.

The claim is made in a BBC Panorama documentary broadcast on Monday evening, which found that over a third of local authorities in England and Wales were providing funding for food banks, despite government claims that charity food is not a part of the social security system. "Food banks are an inadequate plaster over a gaping wound," Dowler said.

On Sunday, Cardinal Vincent Nichols, the archbishop of Westminster, repeated his criticisms of the welfare system, saying that "some of the priests who are right there on the ground say it comes across as punitive". He revealed that he was bringing a group of priests together to discuss the evidence, and welcomed the inquiry into food banks being chaired by the archbishop of Truro and Frank Field.

Policy Exchange suggests issuing first-time offenders, who may or may not have been fairly sanctioned, with a 'yellow card' in the form of a benefits card. It says this would be a more compassionate way of trying to help people back into work.

Benefits would be accessed via this card for a maximum of eight weeks. If the claimant continues to breach job search conditions, the card and benefits would be taken away. This system would provide a safety net, mitigating hardship while a sanction is appealed, forcing claimants to re-engage with Jobcentre staff and deterring non-compliance through the added inconvenience of daily sign on.

They would also be asked to sign on daily as part of a proposal to create a more compassionate but stricter sanctions regime.

It suggests that repeat offenders should be punished more seriously.

The report also recommends more stringent penalties for people who consistently break the terms of their job search requirements. According to the research, between October 2012 and September 2013 there were 30,000 claimants on their third sanction or more for lower tier offences such as missing an interview with a Jobcentre adviser. Repeat offenders should have their benefits taken away for a longer period of time from 13 to 26 weeks for a third breach. For each offence, a further 13 weeks should be added.

Monday's Panorama also uncovers evidence that a jobcentre appears to be explicitly alerting its staff to the financial savings to be made through "sanctioning" job seekers when they are judged to have broken benefit conditions.

A wall chart in a Grantham jobcentre explicitly sets out the cash savings available to the Department for Work and Pensions (DWP) through stopping the benefits of claimants, ranging from £227.20 a week for a four-week sanction to £3,728 for a sanction lasting one year.The DWP told Panorama: "This was an isolated incident and does not reflect our policy on sanctions."