A new report from the Australian Council of Social Service and UNSW Sydney researchers has revealed two distinct phases of the pandemic for low-income earners, which the advocacy group is holding up as proof that government policies have the power to end - or exacerbate - poverty and inequality.

The report showed how raising welfare payments helped reduce poverty and inequality during 2020, only for it increase once again as support was wound back last year.

"The COVID-19 pandemic has taught us that poverty and inequality are not an inevitable state of being," the council's chief executive, Cassandra Goldie, said.

"They grow because government policies allow them to, and in many cases, directly increase them."

Dr Goldie is using the report's on release on Wednesday to pressure candidates ahead of the looming federal election to back raising the JobSeeker rate to at least $69 per day.

In one of the major decisions taken at the outset of pandemic, the Morrison government introduced a $550 per fortnight booster payment for JobSeeker recipients - effectively doubling the rate of the old Newstart overnight.

The new report credited the income support with playing a "decisive role" in reducing inequality at a time when Australia was plunged into recession.

The support prevented more than 3 million people falling into poverty by the middle of 2020, the report found.

From the start of the nationwide lockdown in March 2020 until December that year, the average incomes of the lowest 20 per cent of income earners rose by eight per cent, or $56-per-week. In contrast, average income for the highest earners fell four per cent.

''The income supports introduced during the first COVID wave reduced poverty by half and greatly reduced inequality of incomes," Dr Goldie said.

"We also showed that good social policy, tackling poverty, is good economics."

The coronavirus supplement was reduced to $150-per-fortnight in January last year, triggering an immediate spike in poverty levels, before it ended on March 31.

The JobKeeper wage subsidy program finished a few days earlier.

The Morrison government had agreed to a modest $50-per-fortnight increase to the base JobSeeker rate to coincide with the end of the supplement, taking the daily rate to about $45 a day.

But while the emergency support was being wound back, the pandemic was far from over.

The emergence of the Delta strain in June last year prompted the government to introduce a disaster payment for people who had lost work during lockdowns.

JobSeeker recipients were initially excluded from the payment, before the eligibly criteria was loosened to allow people who had lost more than eight hours of work to access a smaller payment.

The program has now ended after all states and territories hit vaccination targets.

The report noted that as the economy started to rebound from the nationwide lockdown, far more high-paying jobs were created than low-paying ones, exacerbating the income inequality gap.

"Our response to COVID-19 showed we can end poverty. And when we do, it's good for all of us," Dr Goldie said.

Raising the JobSeeker rate and investing in social housing were the two policy levers which could "change the face of Australia for good and for the good of us all".

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: