The Archbishop of Canterbury says there should be higher taxes for the wealthiest to help the less well off.

Justin Welby made the call as a major report by a left-leaning think tank on social justice was launched.

He also argued the minimum wage should be increased to better reflect the cost of living and support struggling families.

The Archbishop - a member of the commission that has produced the report - warned that without action, "bitter resentment" would grow among those who were less well off.

Speaking about the report’s recommendations, the archbishop said the gap between the rich and poor was growing and needed to be tackled.

“For decades the UK economy has not worked as it should, with millions of people and many parts of the country receiving less than their fair share.

"The widening gulf between rich and poor, and fears about the future among young people and their parents, have damaged our nation’s sense of itself.

“Our report shows that it doesn’t have to be like this. By putting fairness at the heart of the economy, we can make it perform better, improving the lives of millions of people.

"Achieving prosperity and justice together is not only a moral imperative – it is an economic one.”

The commission, set up by the left-leaning think tank, the Institute for Public Policy Research, said the present "living wage", as it is described by the government, should be increased by £1 an hour to £8.83 for those over 25.

"The widening gulf between rich and poor, and fears about the future among young people and their parents, have damaged our nation’s sense of itself" - Archbishop Justin Welby

It said people on zero-hours contracts should be paid 20% more on top of that figure.

There should be a tax on multi-nationals accused of avoiding tax, based on their estimated profits in the UK.

The report says: “It should be applied when a firm declared profits below a certain percentage of its global profits for more than five years.”

The report suggests that the extra tax revenue should be used to provide help to young couples unable to get on the housing ladder, with handouts of £10,000.

The Archbishop’s comments were criticised by the Taxpayers Alliance.

In a statement, spokesman James Price said: “With the tax burden in the UK at a near 50 year high and economic growth sluggish, the last thing Britain needs is this poisonous cocktail of tax hikes that will kill growth and simply pass on costs to those on the lowest incomes.

"Tackling the cost of living means cutting and simplifying taxes, not spraying around ever more taxpayers' cash."