Lifeline reported that the number of Queenslanders in financial crisis is growing and it will struggle to help them unless the state government provides extra funding.

According to spokesman Ken Campbell, Lifeline's state government grant ran out on June 30, and the service was seeking continued support of $3 million per year for three years.

He said each month Lifeline offered 1200 counselling sessions and answered 400 calls on its financial aid hotline.

The counselling service on Tuesday reported that 1.2 million Queenslanders, or 28 per cent, were financially unfit at the beginning of 2010, up dramatically from 12 per cent at the start of 2009.

Queensland had the second highest rate of electricity disconnection because of non-payment of bills, the report said.

Mr Campbell said the increase of financially unfit cases mostly comes from low-income families with children, whose combined income was unable to cover the cost of living.

He further said about 60 per cent of them were families receiving welfare payments, over-reliance on debt and have low savings.

Families experiencing mortgage stress in the $60,000-$80,000 income bracket were also increasingly using financial counselling.

We hear all the talk about Australia avoiding the worst of the global economic crisis ... the fact is, Australians and Queenslanders continue to suffer extreme financial hardship, he said.

It's not on the decline ... we expect to see it for the next two years.

Community Services Minister Karen Struthers said the Department of Communities provided more than $63 million a year to Lifeline.

I acknowledge the great work charities like Lifeline carry out around Queensland, and the request for funding is being assessed in line with the normal department policies, Ms Struthers said.

The Queensland budget is due out on June 8.