According to the report:
The agency warned that just five UK households have more money than the poorest 12.6 million Britons - almost the same number of people as those living in households below the UK poverty line.
Oxfam's figures also show that over the past two decades the wealthiest 0.1 percent have seen their income grow nearly four times faster than the least well off 90 percent of the population. In real terms, that means a wealthy elite have seen their income grow by £24,000 a year, enough to buy a small yacht or a sports car, whilst the bottom 90 percent of Britons' incomes have gone up by only a few pounds a week. The average UK salary is £26,500-a-year.With billions in welfare cuts still to come and increasing pressure to offer more tax cuts for the rich, the charity is asking all political parties to audit how their emerging policies would affect economic inequality in the UK.
Ben Phillips, Oxfam's Director of Campaigns and Policy, said: "Britain is becoming a deeply divided nation, with a wealthy elite who are seeing their incomes spiral up, whilst millions of families are struggling to make ends meet.
"It's deeply worrying that these extreme levels of wealth inequality exist in Britain today, where just a handful of people have more money than millions struggling to survive on the breadline."
Growing numbers of Britons are turning to charity-run foodbanks, yet at the same time the highest earners in the UK have had the biggest tax cuts of any country in the world.
Britain's five richest families
1 Duke of Westminster (£7.9bn) is UK’s richest landlord. Owns 190 acres in Belgravia.
2 Reuben brothers (£6.9bn) Self-made Monaco-based billionaire brothers Simon and David, with money in property.
3 Hinduja brothers (£6bn) London-based Srichand and Gopichand run Hinduja Group involved in industries from trucking to banking.
4 Cadogan family (£4bn) Former Chelsea FC chairman, owns Cadogan Estates and most of Chelsea in West London.
5 Mike Ashley (£3.3bn) Sports Direct chief, Newcastle United owner.
Of course, inequality is not a UK specific problem. There are growing levels of inequality in other countries too. Indeed, we seem to be living in a world in which the tiny super rich seem to lord it over the rest of us.
Oxfam warns that "extreme inequality is creating a vicious circle where wealth concentrated in the hands of a few is used to buy political influence which is used to rig the rules in favour of a small elite and perpetuate inequality."
"Such extreme inequality is to the detriment of social mobility and is also increasingly understood to undermine both the pace and sustainability of economic growth."