The Labour authority voted in favour of changing 2,700 contracts from 52 weeks to term time-only.
The council said it would bring staff in line with the other 17,000 workers and "reduce the risk" of staff making claims for equal pay.
Union Unison said it was "bitterly disappointed" with the decision.
Regional officer, Helen Metcalf, said: "This is a devastating blow for the 2,700 teaching assistants in the county, who now face being driven into poverty and relying on food banks through losing Â£200 - Â£400 per month of their salary."
She said there was "no option" but to lodge a formal dispute and ballot members for industrial action.
Teaching assistant Tony Lowery, said: "It is really devastating for my family because I'm the main wager. I don't mean things like going on holidays or a second car, I mean things like food on the table and clothes on our backs."
Liberal Democrat councillors voted unanimously against the plans.
Councillor Owen Temple said the affected staff would "find themselves the poorest teaching assistants in the North East" and the council was "very likely to face legal challenge".
The council's corporate director of resources, Don McLure, said there was a "real risk" that, under the present contracts, other council employees could make claims for equal pay with the teaching assistants.
He said: "I fully understand the position teaching assistants are in but they are very valued, they do a great job and support the education of our children, but we are doing this to bring them in line with the rest of our workforce."
He said two consultations with assistants and the unions had failed to find agreement but it was hoped further discussions would resolve the matter without strike action being taken.

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The 35-year-old has 184 goals in 252 matches in an international career spanning 15 years.
She was in the 2015 World Cup winning squad and won two Olympic golds.
"It's been an amazing, wonderful ride and I can't wait to see what the next chapter of my life brings," she said.
Wambach was the 2012 Fifa Women's World Player of the Year and is also a six-time US Soccer Female Athlete of the Year winner.
She will be with the US team for all four of its December matches, but her final game will come on 16 December against China in New Orleans as the last match of the 10-game tour.
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"Abby is a player who has transcended our sport and her legacy as one of the world's greatest players is set forever," said US head coach Jill Ellis.
"What she has done for women's soccer and women's sports overall with her amazing talents on the field and her personality off it has been inspiring to watch.
"I am just extremely happy that she could end her career with that elusive World Cup title and go out on top, right where she deserves to be."
In her career, Wambach scored just over 500 goals for her high school, college, professional club teams and the United States youth and senior international sides.

More than 5,300 bottles of alcohol were seized by the investigators in the southern city of Liuzhou.
They also found packets of a white powder called Sildenafil, better known as the anti-impotence drug Viagra.
Police in the Guangxi region are now investigating the two distillers.
The Liuzhou Food and Drug Administration said (in Chinese) that the powder was added to three different types of 'baijiu' - a strong, clear spirit that is the most popular drink in China.
They said the haul was worth up to 700,000 yuan (Â£72,000; $113,000).
Doctors recommend that adults requiring prescription should take only one dose of Viagra a day, with a lower dose for those over the age of 65.
China continues to face widespread food safety problems.
In June, police in cities across China seized more than 100,000 tonnes of smuggled meat, some of which was more than 40 years old.
The 2008 tainted milk scandal outraged the nation.
Some 300,000 people were affected and at least six babies died after consuming milk adulterated with melamine.
Durham County Council has approved plans to cut the salaries of teaching assistants by nearly 23% by not paying them during school holidays.
[NEXT_CONCEPT]
Women's football's all-time international leading goalscorer, United States striker Abby Wambach, will retire at the end of a World Cup victory tour in December.
[NEXT_CONCEPT]
Distillers in China added Viagra to thousands of bottles of spirits and told customers it had "health-preserving qualities", food safety officials say.