Australians believe the cost of living for a single adult has risen to almost twice the amount of dole paid to unemployed people.
However, most people do not want unemployment benefits to be so generous they do not encourage the unemployed to look for work.
The results were produced in a survey conducted for the Australia Institute, and released yesterday to put pressure on the government ahead of the budget on May 8.
Federal Labor MPs representing Canberra, Andrew Leigh and Gai Brodtmann, would not directly support a rise in unemployment benefit, which is currently $245 a week for a single adult with no children.
However, ACOSS called on the federal government to raise the level of the Newstart allowance, saying it is far to low to meet the most basic costs of living for unemployed people.
Greens Senator Rachel Siewert lived on $17 a day last week, saying this was the amount dole recipients were forced to live on after paying rent.
The disability and age pensions provide $347 a week to a single person.
The institute blamed the disparity on the lower rate of indexation that has been applied to the dole.
When asked in the survey how much money a single adult needs to meet the cost of living, respondents said that on average $454 is needed per week, almost twice the amount of Newstart.
But when asked how much a single adult should receive from Centrelink, the average reply was $329.
Survey respondents said if they had to live on the dole, they would drive their car less, make fewer trips to the doctor and be less likely to take part in education or training.
Australia Institute executive director Richard Dennis said when workers lost their jobs, as was the case with Toyota last week, the Newstart allowance was often their only safety net.
''Unfortunately a safety net of only $245 per week is often not nearly enough to stop people hitting rock bottom,'' he said.
Member for Fraser Dr Leigh said he could see strong arguments on both sides of the debate.
''It is important to remember that these payments are designed to be transitory to help people out between jobs, not to be benefits that people live on for extended periods, so that's obviously important in thinking about the right level of benefits,'' he said.
Member for Canberra Ms Brodtmann met the ACT Council of Social Services last week to hear of the challenges faced by people living on Newstart.
''Newstart is an important safety net for people who are out of work, it also acts as an incentive for people to get back into paid work, so we have to get the balance right,'' she said.
''And when it comes to the Newstart rate, we've got the balance about right, particularly as delivering a surplus next year and continuing our strong economic management is an important part of this balance.''
Ms Brodtmann pointed out that single unemployed people would get an extra $218 a year as compensation for the carbon tax pushing up the cost of living.