The government is facing the threat of legal action on behalf of hundreds of thousands of low-income families who are being forced to repay tax credits.

Anti-poverty campaigners hope to bring a case against the Revenue & Customs, which they say has acted unlawfully in automatically recouping overpaid credits. The move follows critical reports by the parliamentary ombudsman and Citizens Advice about the hardship imposed on families when the Revenue seeks to recover money without warning.