The Government's benefits cap will struggle to encourage people into work while saving taxpayers' money, according to a report.
The Chartered Institute of Housing (CIH) studied the results of the cap in Haringey, one of four London boroughs chosen as pilot areas for the scheme.
It found that 747 households saw their benefits cut in the four months between April 15 and August 16 because they were above the cap threshold.
But just 74, or 10%, of those were able to find work to avoid their benefits being cut, while 11 increased their working hours to avoid being hit.
Almost 50% of the homes affected claimed extra payments from the council to help them pay their rent.
The CIH said this "both shunts costs between national and local government budgets and masks the true impact of the cap until those discretionary payments run out".
However, the Government dismissed the data as "flawed" because it was from a small London area and collected so early.
The cap was rolled out across the country from July and limits benefits to £500-a-week for families with children or £350-a-week for those without children.
Households affected lost between 15p to £374.50-a-week, with 51% of claimants losing £50 to £199-a-week, according to the report.
The CIH said the reform was changing attitudes towards employment but that many claimants faced problems finding work, including a lack of job-seeking skills and affordable childcare.
Grainia Long, chief executive of the CIH, said: "The Government said the benefit cap would save money and encourage people into work, but this report shows it is far from achieving both of those aims in one of the worst affected areas.
"There have been whispers that the Government is considering lowering the cap or increasing the amount of hours people must work to avoid it. Unless ministers commit to increasing support for people looking to get back into work and funding for childcare this would be very dangerous.
"Ultimately, the Government must do more to tackle the UK's housing crisis. The reason that the housing benefit bill is so high and that so many people are affected by the benefit cap is that we are simply not building enough homes to accommodate our growing population."
Claire Kober, leader of Haringey Council added: "This research shows that the benefit cap has failed in its main objectives.
"Only a few households have been able to get back into work and, while the Government may be making some savings, the real costs are just being passed to local councils already under enormous financial pressure.
"People still need a lot of support to get training or back into work and spiralling housing costs mean there is a long way to go before anyone could claim the benefit cap is working."
The cap covers the main out-of-work benefits - Jobseeker's Allowance, Income Support, and Employment and Support Allowance - and other benefits such as Housing Benefit, Child Benefit and Child Tax Credit and Carer's Allowance.
The Department for Work and Pensions said: "This research relies on early and limited data from a single council and completely ignores the fact Jobcentre Plus has helped 16,500 claimants nationally into work who were potentially affected by the benefit cap.
"We do not recognise this report as providing a sound or reliable picture of the reform.
"The benefit cap is helping to return common sense to the welfare system by placing a fair limit of £500-a-week on the amount a household on benefits can receive."
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