Nearly seven million Britons are risking a "spiral of debt" through using credit cards, overdrafts and payday loans to pay off their rent or mortgage, a major housing charity has warned.

Of those almost one million have taken out high interest payday loans to meet housing costs, in what Shelter has deemed a “totally unsustainable” situation.

Roger Harding, head of policy and research at Shelter said that as households continue to feel the squeeze, there’s "no reason to expect that it won’t get worse”.

Shelter, in its report published Wednesday, also warned it wasn't just low income families at risk: "We're in a situation now when anyone can lose their home because it only takes unemployment or an unexpected illness to start tipping you into that spiral,” Harding told the Huffington Post UK.

"The council of mortgage lenders are predicting a 20% increase in the number of repossessions this year, and that's with interest rates at a 200-year-low. Private rents are going up.

“We are really starting to see increasing numbers of people who are just squeezed into this situation, whose situation hasn't changed but all the costs around them have.”

Harding predicted government cuts to housing benefits, which came in this month, will lead to more people “turning to credit to pay their rent”.

The findings are likely to fuel calls to regulate the payday loans industry, which politicians and financial experts have warned put people at risk of creating insurmountable levels of personal debt.

Labour MP Stella Creasy, who has campaigned against pay day loans said the research, carried out by YouGov last month, showed just how much families were struggling. The MP for Walthamstow called for the government to “regulate the high cost credit industry and stop these companies preying on those trying to make ends meet.”

“With the costs of Christmas to cover too, it is inexcusable the Government refuses to give British consumers the same protection from the rates these legal loan sharks charge that others have across the world - and now we know the consequences of this failure to act could mean not just these families getting into debt, but possibly millions losing the very roof over their head," she told Huff Post UK.

Citizens Advice chief executive Gillian Guy said there had been a four-fold increase in the number of Brits seeking advice on pay day loans in the first quarter of 2011, and the industry was “inadequately regulated”.

Martin Lewis of MoneySavingExpert.com, said Shelter's findings were "incredibly worrying": “The UK is the crock of gold at the end of the rainbow for the world's payday lenders. They've been regulated out of other countries and jump for joy at our lax supervision. That's why these 4,000% APR lenders are exploding across British high streets. Yet these astronomical APRs aren’t the real danger – that comes from the rollover. This is where people can't repay at the end of the month and compound interest kicks in.

“It's incredibly worrying there's now evidence of people using payday loans to meet housing costs. Many struggling with core rent or mortgage commitments will struggle to repay payday loans on time too. While it's an obvious temptation to grasp these loans as a lifeline, in the long run it may hurt more than help. Instead I'd urge anyone struggling with payday loan and housing debts to get in touch with one of the great non-profit, non-judgmental advisors out there, such as Shelter – the sooner the better.”

But John Lamidey, CEO of the Consumer Finance Association which represents business offering payday loans said it would be “impossible” for someone to pay off their mortgage or rent using payday loans.

“They are loans for a short period of time, typically a month. If somebody applies for a loan and it was discovered they are in arrears with a mortgage we would not lend and we would steer them to the debt advice agencies."

The Office of Fair Trading is planning to review the steps businesses take to respect responsible lending rules.