The premium is estimated to be worth on average £2,410 extra a year to schools for each pupil who is eligible for free school meals.
However, the think tank says that because schools have considerable freedom as to how the extra money is spent there are no guarantees that the most disadvantaged pupils will benefit.
The IPPR is calling for the premium to be properly allocated to disadvantaged children through a "pupil premium entitlement", with the extra funding specifically earmarked for catch-up tuition or one-to-one teaching.
The think tank fears that the government's emphasis on more academic pupils achieving the proposed English Baccalaureate qualification sends a mixed message to schools and may perversely encourage them to target extra money on more able students.
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