"Overall, the economic crisis has affected all households, but the less well-off have seen the biggest impact," said Insee in its report.
The poverty threshold, which is equal to 60 percent of the median income, is set at €954 per month. The report says that 8.2 million French people were living on less than that in 2009, compared with 7.8 million in 2008.
This equates to a poverty level of 13.5 percent, or around one in seven of the population.
The worst-off group is students, one in five of whom live below the poverty line.
The report estimated that half of French people have an annual income of less than €19,080 a year (€1,590 per month). The poorest 10 percent live on less than €10,410 a month.
The report also showed the gap between rich and poor to be widening. The wealthiest 10 percent live on more than €35,840 a year, a figure which has increased by 0.7 percent on a year earlier.
Poverty charity Secours Populaire said on Tuesday that the Insee figures underestimated the true extent of the problem.
"The situation has got considerably worse," spokesman Julien Lauprêtre told radio station France Inter on Tuesday.
"When all our branches tell us things are getting worse, it must be true. The Insee figures unfortunately underestimate the reality of the situation in 2011."
The government said that without action it had taken on special payments to disadvantaged groups, the figures would be even worse. Solidarity minister Roselyne Bachelot said that "this increase is linked to the rise in unemployment produced by the economic crisis."
Opposition politicians were quick to criticize the performance of Nicolas Sarkozy's government.
"If we summarize his five years," said Socialist François Hollande, "the rich have got richer, the poor have got poorer and the number of poor people has become even bigger."
"Rather than tax sugared drinks, tobacco, alcohol and theme parks," he added, referring to some of the measures taken in last week's austerity budget announced by prime minister François Fillon, "the government would be better off taking action to help the situation of the poorest families in our country."
On the far-right, Marine Le Pen, leader of the Front National, promised to take five million people out of poverty if she was elected president.
She told AFP the report "shows in a few dramatic figures the failure of the ultra-liberal economic model of Nicolas Sarkozy, the UMP and the Socialist Party, which has created mass unemployment and ever-growing insecurity."