The federation is warning that construction of affordable homes could grind to a halt this year as cash pledged for new projects is withdrawn, budgets are cut and changes to the planning system take hold.

Federation leaders have written to Shapps warning that building work might only start on 20,390 social homes this year – the lowest figure since 1990.

But the minister has dismissed the industry’s fears as he continues with a radical revamp of the sector.  

Shapps warned last week that around 150 social housing projects were under threat because of a £610m ‘black hole’ in the Government’s finances.

Housing associations have already invested millions of pounds in developing sites for new homes – but now face the prospect of the promised money being withdrawn.  

The Government has already announced £100m will be cut from the National Affordable Housing Programme (NAHP), which was meant to deliver 59,0000 new social homes this year 2010/11.

The withdrawal of this funding will see plans to build another 1,453 social homes axed. 

Federation chief executive David Orr said: “The brutal impact of funding cuts combined with the introduction of ill conceived changes to the planning system could lead to a 65% slump in the number of new affordable homes built this year.  

“Worse still, unless the Government takes steps to modify some of the policies recently announced we fear that the overall number of affordable homes built in subsequent years could fall to an even lower number.  

“Given the scale of housing need across the country, we cannot afford for the building of affordable homes to effectively grind to a halt.”

But Shapps countered: “Houses cannot be built by targets that don’t work with money that doesn’t exist.”