The "bedroom tax" will break up small rural communities by uprooting low-paid workers and planting them miles from work, family and friends, it is claimed.
A dearth of alternative housing in the countryside means those affected by the controversial cut, which can slash housing benefit by a quarter, will have "virtually nil" chance of finding a new home nearby, according to a rural campaign group.
Action with Communities in Rural England (ACRE) says the Government's under-occupation charge for social housing tenants will force people to leave the villages where they grew up.
It is backing the call by the House of Commons select committee for Environment, Food and Rural Affairs to "rural-proof" the "tax" by excluding settlements of fewer than 3,000 residents.
The National Housing Federation has said the move could affect around 19,000 households in Devon and around 9,000 in Cornwall and the Isles of Scilly.
In Cornwall, it emerged last week that 3,328 families face losing £780 a year with only 65 vacant one or two-bedroom council properties.
St Ives MP Andrew George, the former Liberal Democrat rural spokesman who voted against the spare room subsidy in Parliament, said tenants could be forced to "up sticks" from Penwith to Bude to avoid the penalty.
Mr George argues that rehousing people locally under the unitary authority system – where family ties "count for nothing" – was already a "big problem", and many were moving into costlier private rented properties. "It is one of the absurdities of the system – it is supposed to save money but it is likely to land the taxpayer with a bigger bill," he said. "This could penalise people working hard on low wages by making them move three towns away – that is a long trod when you have got a tough job on the farm."
ACRE, the umbrella body for England's 38 rural community councils, surveyed its members to assess the impact of the tax, which cuts housing benefit by an average of £14 a week.
Chief Executive Janice Banks said the Department of Work and Pensions had forecast the policy could have a greater impact on rural areas yet went ahead with a blanket approach. He added: "It will inevitably force rural tenants out of villages where they have lived for years, taking them away from their extended families, schools and support networks. It will take key workers away from areas where they perform vital roles.
"Local councils can give extra help to those struggling to meet housing costs, but these payments are only temporary. Social housing providers are facing mounting arrears from tenants who are unable to find the additional payments."
Jim McKenzie, a former Citizens Advice Bureau manager in Cornwall, said alternatives were "hard enough to come by" in urban areas, adding that the chance of moving within a small community reduced to "virtually nil".
In Devon, where housing benefit is administered by ten district, borough and unitary councils, Plymouth and Exeter are hardest hit by the measure.
But rural areas are also affected, such as Torridge where 219 households are under-occupied by one bedroom, and 48 said to have two spare rooms.
The council has forecast the average weekly loss is £11 and £21 respectively.
The Department for Work and pensions said it understood that social housing tenants in rural areas faced tougher challenges.
It has announced an additional £35m in funding, including a £10m transitional payments scheme, a new £20m discretionary housing payment fund, to which councils must bid and £5million for the 21 worst-affected rural areas.
Lord Freud, Minister for Welfare Reform, said: "The new funding will help councils offer greater help to vulnerable tenants and recognises special circumstances of claimants living in isolated communities in rural areas."
However, of the £10million Cornwall received just £46,024, seven rural Devon authorities got £37,735 and the Isles of Scilly received £78.
A breakdown of the £5m, showed that the bulk went to Scotland, with only two councils in the region benefiting.
West Devon Borough Council was given £79,143 and West Somerset Council £81,850.
West Devon said there had been 128 applications, 41 of those related to the bedroom tax, to its discretionary payment fund, which now stands at £150,000.
A council spokesman said it was unable to put a figure on those affected as "people fall in and out of benefit".
South Hams District Council said it had received 119 discretionary payment applications with 74 of those coming from people seeking help with the bedroom tax.