The group attributed the rising levels of in-work poverty to factors such as low pay, increased housing costs, and a rise in the cost of living in the UK.
Parents were found to be more at risk of suffering from in-work poverty than those without children, while the instability caused by insecure work also proved to be significant.
More on in-work poverty:
One of the APPG's suggestions for tackling in-work poverty was the government committing to paying its staff the real living wage, setting an example for companies across the country.
The real living wage stands at £9.90 per hour, increased to £11.05 for those living in London.
John Hood, head of communications at the Living Wage Foundation, said paying a real living wage would be a statement of leadership from the government.
Speaking to HR magazine, he said: "This is a challenging time for workers and businesses, but we continue to see record numbers of employers commit to pay a real living wage. By providing government workers with a real living wage and living hours, government too can show leadership in providing pay that provides dignity and security during this crisis."
"The cost of living crisis is creating unbearable hardships for millions of workers and families, and it’s clear that a real living wage is needed more than ever, as it benefits not only struggling workers, but also businesses and the wider economy."
The report also put an emphasis on improving flexible working policies to allow second earners a chance to remain in the workforce.
Hood added: "Political parties could and should go further by also adopting living hours standards – committing to provide government workers with a minimum of 16 hours a week, if requested, a contract that reflects the hours they regularly work and a month’s clear notice period of shift patterns.
"In doing so, thousands more would be provided with stability in their work. There is also a real need for better funding in social care, where hundreds of thousands are reliant on pay that is far too low. There must now be a consensus across the political spectrum that greater funding for higher pay is vital to the survival of the sector."