The potential reduction in cover, understood to be as much as 70% for some suppliers, comes as Vistry steps up efforts to generate cash and reduce daily net debt, which stood at £470m at the half-year.

Industry sources said Allianz Trade has been informing suppliers in recent weeks that it is reducing credit limits on new trading with Vistry.

According to a report in the Financial Times the final level of cover available is said to depend on Vistry’s financial performance over the coming weeks.

Despite the changes, suppliers may continue trading with Vistry without insurance or with cover from other credit insurers.

The latest development follows Vistry’s decision last month to prioritise faster payments to suppliers as part of a wider balance sheet reset aimed at restoring confidence across its supply chain.

Chief executive Adam Daniels, who took over in April, has made cash generation the group’s immediate priority as the FTSE 250 builder grapples with a weaker housing market and mounting debt.

Measures already introduced include selling completed homes at discounts, slowing construction activity and accelerating supplier payments.

Vistry reported an underlying pre-tax loss of £30m for the first half of the year and announced the departure of finance director Tim Lawlor. The group’s shares have fallen almost 80% over the past two years.

A Vistry spokesperson said: “Credit insurers continue to provide substantial cover for our supply chain which more than meets the Group’s requirements on an ongoing basis.

“We are not aware of any supplier withdrawing trade from Vistry due to credit insurance changes and we have seen no interruptions to our supply chain.

“We maintain positive relationships with our suppliers as we continue to build at scale and pace, delivering the high-quality homes this country needs.”