The number of people living in overcrowded housing will hit three million within the next three years – as a chronic shortage of affordable homes and the impact of the recession forces increasing numbers of families to live in cramped conditions.

The National Housing Federation, which represents England's housing associations, predicts a 20% rise in the number of families living in overcrowded housing by 2013, from 2.55m in 2008 year to 3.04m in 2013.

The Federation called on the three main parties to commit to tackling the nation’s housing crisis – warning that millions of people were now at risk of being trapped in substandard housing for a generation.

The Federation blamed the dramatic slump in house-building for fuelling the crisis. The number of new homes built in England and Wales in 2009/10 – 123,000 – was the lowest number built in 87 years as developers mothballed new developments during the downturn.

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A record 4.5 million people in England are stuck on housing waiting lists and rising unemployment and repossessions has further increased demand for affordable housing during the economic downturn.

The drought in mortgage finance has also forced many young families to stay at home with their parents while they save for a deposit, or simply to abandon hope of being able of afford their own place in the current economic climate.

At the same time, the supply of affordable homes has failed to keep pace with demand and the prospects of getting an affordable home are looking bleaker than ever for millions of Britons.

The problem of overcrowding is particularly acute for larger families of five or more people – with 25% currently living in overcrowded properties.

But with not enough new family homes being built, that figure is expected to increase sharply over the next three years, with over 28% of larger families predicted to be living in unsuitable homes by 2013.

Federation Chief Executive David Orr said: "Living in overcrowded housing can be hugely damaging to family life. It can lead to poor health, depression and puts family relationships under enormous strain.

"High levels of unemployment and repossessions, combined with a dramatic slump in the number of new homes being built has led to a sharp increase in the number of families living in overcrowded housing.

"The next government must make building more affordable homes for families a key priority, and we urge all three main parties to commit now to protecting the housing budget when public spending cuts are implemented after the election."

(CD/GK)