One of Sydney's biggest charities is reporting a 25 per cent jump in demand for free meals as the poor and needy struggle with a blowout in the cost of living.

The Exodus Foundation serves 1,200 meals a day to the poor and needy at its famous Loaves and Fishes restaurant at Ashfield in Sydney's west.

Many people who use the service are vulnerable, homeless, poor or sick - like Ashwani Misra, who is a regular at the restaurant.

"I have been working in IT but in the last few years my work has taken a battering. I've not been able to collect myself to go into serious employment," he said.

"For 10 years everything was fine and then I got into a social mess, gambling and alcohol.

"Things went down, everything came apart – marriage, everything."

Reverend Bill Crews who is the CEO and founder of the Exodus Foundation said the working poor make up a large part of the increase in demand for help.

"We're coming across increasing numbers of people who are one pay packet away from disaster," Reverend Crews said.

The Exodus Foundation's Loaves and Fishes restaurant at Ashfield in Sydney's west has reported a 25 per cent jump in demand for free meals. ( ABC News )

"When that disaster hits they have no resources at all.

"So it could be their child is sick or they've got a sickness. They just cannot not afford to go to work. They just have to go and when things hit then it's catastrophe."

Mr Crews said the reasons for the increase in demand are many and complex.

He blames cutbacks in both state and federal government-funded programs for the poor, increases in rent and food prices and a tougher unskilled job market.

"These people work long hours in the lowest paying jobs ... they're cleaners in office towers or maids in hotels," Reverend Crews said.

"They often have kids and their meagre income simply doesn't stretch far enough.

"A job used to be a ticket out of the poverty trap but in modern Australia that's no longer a guarantee."

He has also seen a noticeable increase in the number of homeless people living and begging on Sydney's streets.

"Government money being withdrawn from other agencies is forcing the needy out of welfare programs.

"At the Exodus Foundation we don't receive any government money for our work with the poor which makes us the de facto safety net for these vulnerable people in Sydney," he said.

Number of mentally ill needing help rises

A high number of people who are mentally ill are helped by the Exodus Foundation with figures up by 27 per cent.

Sorry, this video has expired More free meals needed ( Anne Barker )

Overall 65 per cent of the homeless who use the foundation's mobile food van in Sydney suffer from a mental illness.

About 11 per cent served food from the van are veterans who also have a mental illness.



Reverend Crews said that number is rising due to a lack of government support.

"The veterans tells us that once discharged from the Army or Navy they were left without meaningful support," he said.

"Invariably this made their bad situations even worse and led to their lives spiralling out of control. Homelessness was an almost inevitable outcome."

Thousands of toys wrapped for the needy

The Smith Family is also reaching out to the poor in the lead-up to Christmas.

Volunteers in capital cities are busy packaging 60,000 new toys and books for needy children across the country.

The charity's Steve Macready said this time of year is always tough.

"Most of the families we deal with find it tough all the time," Mr Macready said.

"But certainly Christmas time, that's when it really comes into sharpened focus."

About 1,600 volunteers will offer up their time over the next fortnight to pack more than 12,000 toy and book gift bags for children up to 12.

A few days before Christmas, more volunteers will collect the bags and begin delivering them to families in need around Australia.

Mr Macready said it is not too late to donate to the Christmas gift campaign.