Responding to the new Government figures that almost 1.8 million households, or 4.5 million people, are now on social housing waiting lists.

Local Government Association (LGA) Housing spokesman, Cllr Paul Bettison, said: "With the banks overstretching their credit facilities it could well mean that in the coming months that councils will have to help pick up the pieces as people end up on social housing waiting lists.

"Even when the economic good times were rolling, councils saw ever increased pressure on their social housing stock. Now that the credit crunch is upon the country it appears that many thousands more people will be looking to councils to provide them with a permanent home as they either find it impossible to get on the housing ladder, unable to afford private rented housing or see their home repossessed.

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"With more households joining the ever increasing social housing waiting list over the seven years, experience has taught us that demand will grow even faster.

"Councils want to provide decent homes quickly for those who cannot afford to rent in the private sector or buy their first home but have been hamstrung by the lack of freedom to borrow off council assets in order to invest in building or buying new homes for those who need them most.

"Although house prices are falling, they are still beyond the reach of many. The slowdown in private sector house building will eventually affect that amount of affordable housing that is being built. This will mean fewer new social homes at a time when there will be more demand for them.

"The Government's announcement earlier this week which could allow councils to apply to retain more rental income was a step in the right direction as social housing has to be a top priority because the harsh reality is that fewer people are getting on to the housing ladder."

(CD/JM)