The Government's new housing benefit system has been heavily criticised for housing claimants in expensive houses. But it is in danger of creating poverty traps in towns, cities and rural areas throughout the country, Shelter has warned.

Local Housing Allowance (LHA), which is replacing housing benefit in the private rented sector, is leaving many tenants with significant shortfalls in rent - meaning they either have to find the extra money themselves or move into poorer areas.

Many areas in towns and cities are in danger of becoming far too expensive for LHA claimants. Instead, people may have to move to rural outskirts with far fewer employment and training opportunities.

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LHA is a flat rate of benefit according to household size and location. It is calculated using the average rent in a given area – known as a Broad Rental Market Area (BRMA).

But because the BRMAs are so large there are often huge differences in the rents that people are asked to pay across the area, pricing claimants out of more expensive districts.

However in the cheapest parts of BRMAs, anecdotal evidence shows some landlords are hiking up rents when they know local housing allowance will pay out a higher rent than they are charging.

Shelter Chief Executive Adam Sampson said: "We have heard a lot about a couple of families who have been winners as a result of the new local housing allowance, but very little about the great many people who stand to lose out.

"Our findings show as more claimants move onto LHA, greater social division is almost certain to emerge as the larger BRMAs will create some no go areas for LHA claimants, forcing them to cluster in low cost areas.

"We are calling on the DWP to urgently review the BRMAs and not to push through legislation in early January before considering the evidence about the affordability problems with LHA."

(CD/JM)