The call by the Work and Pensions select commitment said the move would allow pensioners to continue working, helping the two million who live in poverty and the 1.1 million who live off half the average income to earn extra cash.

Past recessions have led to disproportionate numbers of older workers over 50 losing their jobs and never working again. The committee said the Government must never allow this to happen again.

Terry Rooney MP, chairman of the committee, said: "Many Government strategies have worked well in the past but are now showing diminishing returns.

"The Default Retirement Age is discriminatory, is bad for society, bad for older people, and bad for the economy. It has to go."

Charities said pensioner poverty has remained "stubbornly high" for the past four years and called on the Government to eradicate it.

Andrew Harrop, head of public policy at Age Concern and Help the Aged, said: "The Work and Pensions Committee has given a thorough and clear appraisal to the Government of just how serious pensioner poverty is today.

"Working to end pensioner poverty once and for all should be a real focus for both this Government - and for the next. Older people should be able to live with dignity in retirement, not be forced to scrimp and save."

It comes after the author of an influential report into the future of pensions said the state pension age should be raised to 70.

Lord Turner said earlier this month that the age when people get a state pension should be raised more quickly.

The current state pension ages - of 65 for men and 60 for women - will rise to 66 in 2024, to 67 in 2034 and 68 in 2044, with each rise being phased in over two years.

Angela Eagle, pensions minister said: "Government has already shown its commitment by lifting more than 900,000 pensioners out of poverty since 1997, breaking the link between age and poverty.

"We recognise there is more to do, which is why even in these difficult economic times, we have targeted an extra £4 billion to helping our pensioners this year.

"We welcome the Committee's report and share many of the Committee's concerns. We will study the recommendations in detail and respond in due course."

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