The YMCA in England and Wales is calling for welfare benefits to increase in line with inflation rather than wages.
It comes as inflation rose to 10.1 percent in September - up from 9.9 percent in August.
In a new report, the Christian charity lays bare the effect of the cost of living crisis on young people in supported housing.
It says financial resilience amongst young people on benefits is low, with many already in high levels of debt.
The charity warns that the health, wellbeing and future prospects of young residents are under threat, with no government decision yet on whether benefit payments will increase in line with inflation.
David Bridson who is Head of Campaigns and Research at the YMCA has been speaking to Premier about the report :
"The findings are really stark. We're seeing that young people are going without food, skipping meals constantly. We've seen that mental health has just absolutely gone into the gutter because people can't afford to even leave their flats anymore.
"When we look at their aspirations and their futures, people aren't willing to take the risks to build back independence or by moving into work or moving into independent living, which is what we need them to do to be able to move on and benefit from society. So it's a huge concern for us. Some of the people that we support are the hardest hit in society."
YMCA is calling on Government to rethink its approach by updating welfare benefits in line with inflation, and increasing funding to provide local authority grants to support local needs, such as food and winter clothes vouchers. The charity also wants the government to amend rules around the £400 energy rebate to include those living in supported housing, and address issues with moving on from supported housing, as well as the barriers faced when trying to get into work.
David Bridson said :
"The young people we support don't have savings to fall back on, they don't have families that support them, or friends that they can ask for a bit of cash from. So they're simply going without.
"In our report people say at the end of the month, 'I just sit in bed and drink a glass of water, because I can't afford to do anything. I can't afford to eat and I just wait for pay-day. There are other people that are saying, 'I can't even get the bus into town to just to have a just window shop for something to do. And that's bad for mental health."
"The people in our accommodation have faced homelessness and we on average have spent two years getting them on track so they're able to live independently. But now they can't afford to live independently in the private rented sector. So people will be staying with us longer and it means we won't be able to help as many people in the future."
YMCA is the largest voluntary sector provider of supported housing for young people in England and Wales, providing a bed for 8,800 people each night and collectively helping more than 20,000 people experiencing homelessness each year.