Low-income women are unfairly denied maternity pay in a "clear injustice” triggered by government rules, campaigners have warned.
The present system means a woman claiming Universal Credit at the same time as Maternity Allowance has her maternity pay deducted from the total she is able to claim.
Child Poverty Action Group (CPAG), which tackles poverty and social exclusion, brought a judicial review against the government over the rules but the High Court upheld the current system last year.
While the charity sought to challenge the decision, their permission to appeal was rejected on Wednesday.
Ros Bragg, director of Maternity Action, a pregnancy charity supporting the review, told The Independent the current rules are forcing pregnant women and new mothers into poverty as well as exerting an emotional strain on families.
She said: “Having a baby has a huge financial impact on families. Women need to take time off work. Families need to purchase buggies, clothes and other equipment.
“Many families find themselves in debt as a result. Low-income families need to buy those things for babies too and this can push them into very difficult financial circumstances.”
Ms Bragg said she is “disappointed that the leave to appeal was rejected” - especially as she thinks the “issue needn't have gone to court at all”.
She added: “This is a manifestly unfair provision in the Universal Credit regulations – and one that the government could resolve immediately.
“Maternity Allowance shouldn’t be treated any differently to Statutory Maternity Pay – both are paid based on recent earnings, and yet new mothers on low incomes are up to £5,000 worse off because of it.
“It’s a clear injustice and one that could easily be rectified by the government without having to waste the court’s time.”
The rules which result in hefty sums of money being deducted do not affect women receiving Statutory Maternity Pay and only impact those getting Maternity Allowance.
But campaigners state women are often on Maternity Allowance instead of Statutory Maternity Pay for “arbitrary reasons beyond their control” which include happening to move jobs before becoming aware they were pregnant, or taking sick leave or being made redundant while they were pregnant. On top of this, self-employed women are only eligible for Maternity Allowance.
A single woman with a new baby on Maternity Allowance and Universal Credit can have as much as £550 each month less money than a woman in the same situation claiming Universal Credit and Statutory Maternity Pay. This adds up to a disparity of nearly £5,000 over the course of 39 weeks of maternity leave.
Women who are currently in employment or recently worked are able to claim both Statutory Maternity Pay and Maternity Allowance.
Last year, the High Court ruled the gulf between the way Maternity Allowance and Statutory Maternity Pay is handled was justified.
A spokesperson for the Department of Work and Pensions said: “Universal Credit is a means tested benefit and both Statutory Maternity Pay and Maternity Allowance are taken into account when calculating payments.
“It is right that a claimant’s award is adjusted to take into account support they are already receiving, including income through benefits.
“Statutory Maternity Pay is paid by an employer and is therefore subject to the work allowance and tapering within Universal Credit, as are other earnings.”