Working families increasingly depend on state benefits to avoid eviction from their homes due to a soaring housing market, research has found.
A failure to build enough new homes in recent years has pushed rents and house prices up, and led to an 86% increase in housing benefit claims since 2009 by those in employment, according to a National Housing Federation (NHF) report.
The study said that 10,000 more working families now need housing benefit every month to help pay their rent, with 417,830 more workers claiming them over the last three years.
David Orr, chief executive of the NHF, demanded a solution for "millions of families" who are struggling to keep on top of their rents and being priced out of the housing market.
"These people are the 'strivers' the Government wants to help, yet their future is looking bleak," he said.
"This cannot continue - we need action now to address the causes of rising housing costs, not just the symptoms.
"Only by addressing the chronic undersupply of new homes can we stem the financial pressure on families and Government."
The cost of privately renting a home has gone up by 37% and is set to continue its upward spiral by a further 35% in the coming years, the research found.
With the economy in dire straits, house prices will continue to fall going into 2013, but the NHF expects price growth of 6% a year across England from 2015 to 2017.
The umbrella organisation, which represents 1,200 housing associations in England, said 390,000 new families were formed in 2011 but only 111,250 new homes were built.
It called on the Government to take a "long-term joined up approach", with measures such as releasing publicly-owned brownfield land to housing associations so they can build more new properties.
Housing and homelessness charity Shelter reacted to the report by asking the Government what it is going to do to tackle the problem.
Shelter chief executive Campbell Robb said: "Every day Shelter speaks to young people and families who are paying the price for a housing crisis that's been left to reach boiling point.
"Their aspirations for a stable and affordable home are being crushed by rising rents that leave them struggling to keep a roof over their head, let alone save for a deposit.
"Many are living with their parents until their mid-thirties and even beyond, when all they want to do is to get on in life."
"If we want to protect the next generation from a life lived under constant threat of eviction or rent rises, we have to invest in building more good quality, affordable homes," he added.
Housing minister Mark Prisk said: "With over three million people relying on the private rented sector for their housing needs, we are determined to attract new players to the market and pull out all the stops to get Britain building.
"That's why we're offering £10 billion in loan guarantees to provide up to 15,000 new homes for rent, putting £19.5 billion public and private funding into an affordable homes programme, and why we've identified enough formerly used surplus public sector land to sell for 100,000 new homes.
"But it's right that we also take action to get the Housing Benefit bill under control and under our reforms, those on housing benefit can still afford up to a third of homes on the local rental market."
Shadow housing minister Jack Dromey said: “The Government’s housing and economic policies are failing. Millions of families are struggling with housing costs as wages are squeezed and rents go through the roof.
“But the housing crisis is not just costing tenants more but the taxpayer too. We now face the prospect of nearly a million working people relying on Government support to pay their rent through housing benefit."