LONDON (Reuters) - The gap between Britain's richest and poorest is wider than it was 40 years ago, a report commissioned by the government said yesterday.

The National Equality Panel study, authored by academic experts, found that by retirement age the differences in wealth can be "colossal".

The panel found "systematic differences" in equality outcomes remained between social groups, and said many people would find the "sheer scale of inequalities" shocking.

Illustrating the huge disparities, it said that by retirement half of those who have worked in top professions had net assets worth more than £900,000.

At the bottom of the rung, however, a tenth of those who have had unskilled jobs had property, savings and possessions worth less than £8,000.

One statistic published in the comprehensive study indicated that by 2007-2008 Britain had reached the highest level of income inequality since World War Two.

It also said the discrepancies in earnings is high in Britain compared with other industrialised countries. The report concluded the government has failed to close the gulf that existed between the poorest and richest in society in the 1980s.

"Over the most recent decade, earnings inequality has narrowed a little and income inequality has stabilised on some measures, but the large inequality growth of the 1980s has not been reversed," it said.

It follows research published by Save the Children on Tuesday which found that 13 percent of the UK's children were now living in severe poverty. Equality minister Harriet Harman, who commissioned the report, said the government would continue to make tackling inequality and poverty a priority.

"One of the things the report says is that this is not something the government can't do anything about and that actually government action does make a difference, it does work," she told BBC radio.

"So we take from it we have got to sustain and step up that action because it takes generations to make things more equal."