The reduction of payments for social tenants deemed to have a larger home than they need have hit vulnerable people not intended as targets,the Work and Pensions Committee said.
It said the rules were having a “severe” effect.
But the government said its reforms were restoring fairness to the system.
The changes – dubbed the “bedroom tax” by critics but described by ministers as the removal of a “spare room subsidy” – were introduced in April last year.
Social housing tenants found to have one spare bedroom have had their housing benefit reduced by 14%. Those with two or more spare bedrooms have had reductions of 25%.
Ministers say the policy frees up larger homes and saves the taxpayer £1m a day.
In its report, the committee urged the government to exempt anyone whose home had been adapted to help them with their disability.
Chairwoman, Labour MP Dame Anne Begg, said: “The government has reformed the housing cost support system with the aim of reducing benefit expenditure and incentivising people to enter work.
“But vulnerable groups who were not the intended targets of the reforms and are not able to respond by moving house or finding a job are suffering as a result.
“The government’s reforms are causing severe financial hardship and distress to vulnerable groups, including disabled people.”
She added: “Using housing stock more efficiently and reducing overcrowding are understandable goals.”
Dame Anne added that between 60% and 70% of homes affected by the change contained “somebody with a disability, and many of these people will not be able to move home easily due to their disability”.
She said: “So, they have to remain in their homes with no option but to have their housing benefit reduced.”
But a Department for Work and Pensions spokesman said: “Our reforms are necessary to restore fairness to the system and make a better use of social housing. Unreformed, the housing benefit bill would have grown to £26bn in 2013-14.
“We have given councils £345m since reforms came in last year to support vulnerable groups, especially disabled people.
“The removal of the spare room subsidy means we still pay the majority of most claimants’ rent. But we are saving the taxpayer £1m a day which was being paid for extra bedrooms and are freeing up bigger homes for people forced to live in cramped, overcrowded accommodation.”
For Labour, Rachel Reeves, shadow work and pensions secretary, said: ‘It’s completely unfair that so many are charged for the space they use to store essential medical equipment such as dialysis machines.”
BBC research published earlier this week suggested that about 6% of social housing tenants affected by the changes to benefits had moved home since last April.