Households in the UK may be facing the biggest drop in income for 30 years, a leading economic think tank has warned.

The Institute for Fiscal Studies said median take-home incomes had actually increased during the recent recession.

But the institute's analysis of latest government figures suggested it was "entirely possible" that median incomes dropped by 3% in 2010-11.

The policy group said such a fall would leave median income levels back where they were in 2005.