As the shocking figures came to light, it has also emerged that Leeds has become the first major northern city to scale back its housing plans.

The research carried out for the National Housing Federation by consultant Tetlow King reveals that the housing crisis can only worsen as house builders struggle to find sites where they can build much-needed homes.

Communities secretary Eric Pickles wrote to all councils in July telling them they were free to ignore previous government home building targets.

These were put in place by the Labour government to achieve its aim to build three million new homes in England by 2020.

The 100,000 lost homes figure includes: 9,600 cut by Bristol City Council, 3,000 cut by Exeter, 10,750 by North Somerset, and 9,200 by North Hertfordshire and Stevenage.

Jamie Sullivan of Tetlow King, which carried out the research, said: "The overall reduction in housing targets will now be at least 95,000 since the Pickles letter".

Sullivan said Luton and South Bedfordshire had cut their targets by 10,000:

"So it could be argued that the number of homes that will not now be planned for is around 100,000".

Meanwhile, Leeds city council has just confirmed plans to slash house building targets from 4,740 to 2,300 homes a year.

It said the move would help it to prevent greenfield development on the edge of the city.

The council rejected an appeal by the Home Builders Federation, which had argued that the decision would disadvantage non-homeowners and "the wider Leeds economy".

The latest revelations will step up pressure on Government.

Peter Williams, former chairman of the National Housing and Planning Advice Unit, which was scrapped by the Communities secretary in July, has warned of the dire consequence of the move.

He said 300,000 homes needed to be built each year to avoid affordability pressures worsening.

Williams said: "Getting back to the level of house building we saw before the recession is nowhere near enough. We need to deliver half as many again extra homes".

The latest data from Nationwide joins a raft of evidence pointing to the country's housing market stagnating over the summer.

The average house price now stands at just over £166,500.

According to Nationwide, the annual rate of price inflation has slipped to 3.9%, down from 6.6% in July and from 8.7% in June.

The 3-month comparative change in prices - generally seen as a smoother indicator of house price trends - fell from 1.2% in July to 0% in August.

Martin Gahbauer, Nationwide's Chief Economist, said: "Unless prices bounce back in September, the three-month rate of change will turn negative next month."

Latest data from the Bank of England shows mortgage lending is stuck at about half the level usually seen in a healthy housing market.

In July, the number of mortgage approvals lingered at 48,700, up only slightly on June's figure and still at a level consistent with house price falls.

Over the past decade monthly approvals averaged out at 93,000.

The new figures will raise the pressure politically on whether the Coalition Government's deficit reduction programme is unnecessarily harsh.

The Bank also reports a disturbing rise in the volume of bad loans being written off by lenders - £3.2bn of loans to individuals went bad in the second quarter of this year, a record high.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, said: "The figures provide further confirmation that the housing market is heading for a double dip, with net mortgage lending pretty much flat and the number of mortgage approvals remaining very low."

"The figures for mortgage approvals tend to be well correlated with prices and the latest figures clearly point to falling prices over the second half of this year and into 2011, particularly now that supply shortages have eased," Goodwin added.

Taken with other housing data, the signs are that the housing market has failed to deliver a seasonal summer bounce.

Nationwide reported a 0.5% price fall during July, while Halifax reported falls for four of the first seven months of the year.

The Royal Institution of Chartered Surveyors recently said house prices were slipping, with the balance of surveyors reporting rising house prices eroding.

New buyer inquiries are at their lowest level since September 2008, and the reading for the number of new instructions - sales - is the second-highest reading since this series began in 1999.

Treasury figures in July showed that Britain borrowed £155bn in 2009-10. That is £12bn less than the amount forecast by Alistair Darling in his March budget.

Balls unveiled the radical policy at a special event at the National Housing Federation today (31.8.10) in central London alongside Yvette Cooper, shadow housing minister John Healey and former London Mayor Ken Livingstone.

Balls said: "The coalition government wants to use the extra money to pay down the deficit faster.

"I think that at a time when the economy is still so fragile and other countries are already tipping back into recession, we should instead use that money to boost construction jobs and build new homes."

Based on figures from the National Housing Federation, the extra £6bn investment Balls is calling for, together with matched funding from housing associations, would see an additional 100,000 homes built.

The Home Builders Federation has estimated that every home built creates 1.5 fulltime jobs plus up to four times that number in the supply chain.

So increasing the output of homes by 100,000 would generate up to 750,000 jobs, claimed Balls.

He said: "Crucially, all the extra growth and tax revenues these plans would create would help us pay down more of the deficit later on when the economy is fully recovered."

The Shadow Education Secretary also called for a temporary 5% VAT rate for the repair, maintenance and improvement of housing from January - when the Government plans to hike the tax to 20%.

Mike Leonard on behalf of the Get Britain Building Campaign said "We need to recognise that investing in construction is vital as the money stays in the UK, jobs are created and we are building a better future. We welcome any initiative that puts investing in construction at the centre of the recovery agenda."