More than 1m homes are planned for the south-east

The Association of British Insurers said up to 10,000 of the 1.1 million homes to be built in south-east England by 2016 were located in floodplains.

It said the cost of flooding could rise by �55m a year, and some houses could be uninsurable without more safeguards.

The government said the report showed careful planning could manage the risk.

[The] government is committed to working with the ABI and the Environment Agency to ensure we get this right Keith Hill Planning Minister

Deputy Prime Minister John Prescott last week confirmed proposals for 1.1 million new homes to be built in the south-east over the next 11 years.

The scheme targets four growth areas - Milton Keynes and the south Midlands, Ashford in Kent, the Thames Gateway in south Essex and north Kent, and a strip running from Peterborough to London.

The ABI's study, Making Communities Sustainable, said a strong planning policy could reduce the risks to negligible levels in Ashford, the M11 corridor and the South Midlands.

It said the risk could be halved in the Thames Gateway.

The report's key recommendations included:

• Planning guidance should be strengthened to ensure low-risk areas are developed first
• Developers and local authorities should use flood risk assessments to consider options for reducing the risk of floods
• Flood defence spending should be targeted towards vulnerable sites
• Measures including raising living space and services such as electrical wiring to above flood levels should be used in properties in the floodplain

Nick Starling, ABI director of general insurance, said: "Our report shows that flood risk in the growth areas could be managed effectively by building on existing Government policies and plans.

"We welcome steps that have already been taken, but these need to go further. Working together, Government, local authorities, developers and insurers can ensure that truly sustainable communities are achieved."

'Management'

Planning Minister Keith Hill said: "[The] government is committed to working with the ABI and the Environment Agency to ensure we get this right.

"The ABI's research shows that, with careful management through the planning system, flood risk in the growth areas can be minimised."

On Sunday, the Commons Environmental Audit Committee warned that the housing plans would cause "irreversible environmental damage".

It said issues such as energy needs and transport had not been properly addressed.