Plans to build 270,000 affordable homes for low income families over the next decade could be axed under government plans to slash funding for new developments by up to 50%, a campaign group has warned.

The National Housing Federation said it had been told housing was likely to be one of the biggest losers out of next week’s spending review, with "doomsday" cuts anticipated that will see affordable house building virtually grind to a halt.

The Federation warned cuts of 50% would effectively shut the door on an entire generation of families on lower incomes by withdrawing billions of pounds worth of funding for affordable housing schemes.

Waiting lists are already at record levels with 4.5 million people currently waiting for a social home in England, while an estimated one million children are living in overcrowded housing.

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But just as the demand for new homes has reached new highs, the number of homes being built has slumped to its lowest level since the Second World War with just 113,000 built in 2009/10.

A 50% cut to the affordable housebuilding budget would mean the budget between 2011/12-2019/20 would be reduced from £28.6bn to £10.5bn - a fall of £18.bn assuming spending only rises by inflation at the end of the spending review period .

Cutting funding for desperately needed social homes would also call into question the Prime Minister’s pledge to "always looking after the poorest in our country".

The Federation estimates spending cuts of 50% would reduce the number of affordable homes built between 2011/12 and 2019/20 from 426,000 to 157,000.

The lost spending would have supported 36,700 a year for nine years.

Federation Chief Executive David Orr said: "Brutal cuts of 50% to the housing budget would effectively shut the door on an entire generation which would be left with little hope of ever being allocated a social home.

"Over 36,000 jobs would also be lost from the construction industry every year and cost the economy £6.5bn a year in lost activity – if cuts on this scale were introduced.

"The government said it was committed to social housing and to protecting the most vulnerable. This can only be interpreted as a blatant betrayal of those promises and a kick in the teeth to millions of people stuck on waiting lists."

(CD/KMcA)