The Financial Inclusion Centre said 100,000 families had borrowed a total of £29m from illegal money lenders.

The think tank said on average it would take a year to pay the money back as lenders recouped three times the value, with some interest rates up to 1,500%.

The average amount borrowed was £288, but the average repayment was £820.

Mick McAteer, director of the Financial Inclusion Centre, said: “Because of the financial crisis, the High Street banks are restricting the access to loans to those people they consider to be low risk or [have a] higher income.

“That tends to push more and more people out into the hands of loan sharks.”

The research was commissioned by housing association Circle Anglia, after it noticed loan sharks increasingly targeting its residents.

The government’s consumer minister, Kevin Brennan, said: “It is worrying that people are borrowing these sums of money from loan sharks, because they’re illegal.

“In the law they don’t have to pay it back, and my advice would be don’t go to a loan shark if you need to borrow. Approach a credit union or one of our debt advice teams.”

Chris Tapp, of charity Credit Action, urged people to contact the police if they fell victim to loan sharks, because the lending was illegal.

He said: “It often feels like the only option is to go for the person they know of locally, to go to the loan shark, but that’s not actually the case.

“In a lot of communities now around Britain there are credit unions or local finance organisations that operate from the ‘third sector’.

“They’re not-for-profit organisations that can lend money at considerably lower rates.

“It’s not actually as cheap as you’d get from a bank, but it’s much cheaper than borrowing from an illegal lender.”

Also, the government’s social fund helps people on low incomes and on benefits when they need crisis loans immediately, he said.