WORKERS are increasingly turning to payday loan firms because their wages run out before the end of the month, creating a "debt disease" that is spreading rapidly across the country, a new report has warned.

Research for Unite among 24,000 workers revealed the finding that one in eight regularly turned to loan companies such as Wonga, Quick Quid and Money Shop to tide them over in the week before getting their wages.

The union said workers faced "horrific" levels of interest, up to 4200%, as they take out loans averaging £200 a month.

Unite said, at such high levels of interest, it would take people three working days a month to pay back a loan of £200.

Two-fifths of those drawing loans used the money to pay their rent or mortgage and food, while a further 15% spent it on utility bills.

Londoners borrowed the most for housing, while workers in Scotland were most likely to use loans to buy food.

The study also showed workers even considered leading supermarkets to be too expensive.

Unite general secretary Len McCluskey said: "This is the true cost of the banking crisis and this Government's mindless austerity addiction. Working men and women are under horrific strain, lumped with wage cuts and rising costs.

"Their falling wages simply do not last the month and in trying desperately to get by they are being driven into the arms of vulture lenders."