The Conservatives said Lady Vadera's comments showed that ministers were "insensitive and out of touch" with the economic reality facing millions of families.
Vince Cable, the Liberal Democrat treasury spokesman added that they showed she was "living in a parallel universe".
"With thousands of jobs being lost every day and many families at risk of repossession, recovery is sadly a long way off," he said.
"Ministers shouldn't talk down the economy, but Lady Vadera's comments are a work of fiction."
John Cridland, the deputy director of the CBI, said he had seen "no signs" of any economic green shoots, despite her claims.