By Steve Schifferes BBC News Online economics reporter

Labour's attempt to appeal to core group of supporters - council house tenants - could be threatened by new plans to deal with the housing crisis.

That is because their rights to buy their homes may be halted in some areas of London and the South East, Deputy Prime Minister John Prescott has signalled.

The Right to Buy undermined - and continues to undermine - social housing in designated housing crisis areas John Prescott Deputy Prime Minister

According to the homeless charity Shelter, the right to buy should be suspended in those areas because it is making chronic shortages worse.

But the right to buy is popular among council house tenants, who see it as a ticket to social mobility.

And some housing researchers say that a ban on the right to buy would do little to help the homeless.

Thatcher's children

The sale of council housing was a key electoral plank of former Prime Minister Margaret Thatcher when she was elected in 1979.

And Labour's lead among council house tenants shrunk dramatically both in l 979 and l983, when their support fell below 50% for the first time ever.

That is why even after Labour returned to power in 1997, it was reluctant to tackle the issue of the right to buy, fearing that it would weaken its standing among council house tenants.

Instead, Labour pledged a ten-year plan to modernise the council housing sector, ensuring that all tenants received new bathrooms and kitchens and that the massive backlog of council house repairs was completed by 2010.

And it decided to use proceeds of council house sales to finance that modernisation programme.

Pressures on housing

But the inability of young people and key workers like nurses to afford housing in London and the South East is becoming a key electoral issue.

Prescott says there will be a housing "step change"

John Prescott has already announced plans to ease planning restrictions to allow more homes to be built for owner-occupation in the South East, but he faces fierce opposition from local councils and residents.

He is also planning to release more funds for public sector house building, which has fallen to a record low.

But restricting council house sales could also release more public sector homes for rent, especially if tenants are offered increased incentives to move out and purchase privately.

And it could help ease the homelessness crisis, with 60,000 families in London and the South East living in bed and breakfast hotels due to the inability of local councils to provide other housing for them.

Problems to come

But any government plan to restrict the right to buy could be ineffective and counterproductive, according to housing researcher Steve Wilcox.

About one-quarter of the finance for new homes now comes from the sale of council housing, and Mr Wilcox says that for every two homes sold, the government can afford to build one more.

This, he argues, is a quicker way of helping the homeless than banning sales - because it may take around 10 years before a council tenant who might have bought would vacate his home, freeing it up for reletting.

Mr Wilcox is also sceptical of plans to increase discounts to tenants to move elsewhere, arguing that this would increase the trend to marginalise council estates.

Appealing to the grassroots

New Labour has been much criticised for appealing more to middle class than working class voters and losing touch with its grassroots.

And indeed Tony Blair's landslide victories have meant that the Labour support is more middle class than ever, according to political scientist John Curtice.

But Labour has always had a huge advantage among the declining number of council tenants.

Its support among council tenants, however, dropped by 4% between the 1997 and 2001 General Elections.

And it was in the inner city constituencies, with many council tenants, that turnout was lowest in that election.

If Labour's support among this group continues to weaken, it could spell trouble in future, closer elections.

The government's desire to provide more help for the homeless and young people seeking to set up their own home has, as usual, come up against another hard political reality.