Millions of poor families are taking out loans from door-to-door credit salesmen at interest rates of almost 200 per cent, according to a report on household debt.

Save the Children said that up to 2.3 million people have taken loans at excessively high interest rates because it was the only way they could borrow.

High street banks rarely offer loans to people with a bad credit history, leaving poor families with little choice other than to borrow from doorstep personal credit firms. There is no law against charging high interest rates, as long as the terms are advertised clearly and not buried in the small print.

Save the Children singled out for particular criticism Provident, the personal credit firm, which charges 183.2 per cent on its loans.

Jason Strelitz, author of the report and Save the Children’s poverty adviser, said that millions of people were forced down the high-cost credit route to pay for basic essentials, such as energy bills. “Doorstep lenders exploit poor families’ inability to get credit from more mainstream lenders and they cover their risk in lending to the less well-off by charging punitive interest rates,” he said.

For the poorest families, even personal credit companies are beyond reach. The report found that 165,000 people are forced to borrow from illegal lenders or loan sharks. The costs of borrowing vary but, on average, the initial loan is repaid almost three times over, with £285 paid back for every £100 borrowed.

The charity said that it was not calling for more regulation of credit companies, but for grants for the poorest families at the most expensive times of the year – July and December.

The Conservatives said that the report was “real food for thought”.

Caroline Flint, Minister for welfare reform, said that the Child Trust Fund would strengthen the saving habits of future generations and promote financial education.