An estimated two million families have to make do with less than RM3,000 (S$1,174) a month, said Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar.
However, statistics show that average household income had risen by 10 per cent in the last five years, he added.
"Although we believe that we are on track, the situation is not comfortable yet," he told Datuk Irmohizam Ibrahim (BN-Kuala Selangor).
He said that about 71.3 per cent out of seven million families lived on a monthly income above RM3,000.
The rest of them would have to survive on less, he added.
Abdul Wahid said the household income of some 40 per cent of people in the lowest income level had recorded a rise from an average of RM1,440 in 2009 to RM1,847 (in 2012) and RM2,313 this year.
He said the Government would continue to assist those in the lower income group through programmes such as BR1M, Kedai 1Malaysia and affordable housing.
Earlier, Abdul Wahid told the Dewan Rakyat that surveys carried out by the Statistics Department in 2009, 2012 and 2014 on household income levels were based on United Nations' criteria.
He noted that median household income rose an average of 8 per cent annually for the past five years, which was above the annual inflation rate of 2.3 per cent for the same period.
The monthly household income in 2009 was RM4,025, RM5,000 in 2012 and RM5,919 this year.
Later, Deputy Finance Minister Datuk Ahmad Maslan said a confidentiality provision under the Income Tax Act meant that personal taxes paid by Malaysia's top 20 billionaires could not be revealed.
"The amount paid by someone is confidential and cannot be revealed under privacy laws as stated in Section 138 of the Act.
"So, I am not able to reveal the taxes paid by the nation's 20 richest," he said when winding up the debates on the Inland Revenue Board of Malaysia (Amendment) Bill 2014.
Ahmad also stressed that the board did not practise favouritism.
"The IRB will assess how much taxes have to be paid. No one is exempted as the board shows no favouritism," he said, replying to claims made by Opposition Leader Datuk Seri Anwar Ibrahim that Malaysia's richest people were given concessions by the IRB.