The National House Building Council received 8,750 applications from builders last month, a drop of 12% from August and 3% on September last year.

The latest set of bad figures come weeks after the Government pledged to return the industry to historic building levels, with fresh measures aimed at stimulating affordable house building.

The worsening house building market could become a major political embarrassment to the Prime Minister, after he personally promised a housing revolution to build the country out of the crisis at this year’s party conferences.

The brunt of this month’s fall was felt in social housing, where September’s figure was 16% down on last year. But private home registrations did manage to edge up 2% against September 2010.

In the first nine months of this year, only 93,870 applications to build new homes have been registered, just 6% more than the same nine month period last year.

The figure was almost half the 15,871 recorded at the peak in September 2007 and underlined the size of the task ahead if Government is to restore house building to traditional levels over the next four years.

The three-month trend figure show registrations treading water, with private sector starts replacing the 8% fall in public housing compared to last year.

NHBC chief executive Imtiaz Farookhi said: “Although headline registration volumes are marginally above last year’s for the UK, viewing the figures in absolute terms underlines the real scale of the challenge facing the whole house building industry.

“Just this month the Government announced its ambition that 230,000 homes need to be built each year by the end of 2015.

“But meeting this target will require a bold approach from the coalition. Ultimately, the many pressing issues currently being debated, such as homelessness and housing costs, are rooted in the chronic undersupply of new housing.”

He added: “The Government therefore needs to not only remain strong on policy already announced but also must be prepared for further assertive action if it becomes clear that house building volumes in the UK continue to remain at perilously low levels.”