The scheme looks to refurbish some houses and demolish others

The spending watchdog says that demand in the "Pathfinder Areas" has risen, but it is not clear if that is because of the scheme launched in 2002.

Some 1,100 homes have been built, 40,000 refurbished and 10,200 demolished in the nine existing areas.

Ministers say they have revitalised some of England's most deprived areas.

National Audit Office head Sir John Bourn said: "Housing Market Renewal is a radical programme but it is a high risk approach.

You have to wonder if these areas would see the same or greater regeneration if left to their own devices Edward Leigh, Conservative MP

"While there have been physical improvements in some neighbourhoods, it is unclear whether intervention itself has led to improvement in the problems of low demand.

"And in some cases intervention has exacerbated problems in the short term.

"The Department for Communities and Local Government needs to make sure that Pathfinders not only delivers its regional development plans, but also complements the broader regeneration of areas contributing to better schools and transport links."

The chairman of an influential MPs' committee said many residents felt the authorities had "ridden roughshod" over their communities, with little clear evidence of improvements.

Refurbish and demolish

Edward Leigh, the Conservative chairman of the House of Commons Public Accounts Committee, said: "There is no evidence that Pathfinders are bringing about improved social cohesion and although low demand for properties has fallen in the Pathfinders Areas, it hasn't fallen as quickly as it has in the rest of the country.

"You have to wonder if these areas would see the same or greater regeneration if left to their own devices."

A Department of Communities and Local Government spokesman said: "The NAO acknowledges that housing markets have performed better in Pathfinder local authorities than in those authorities with the most similar level of low-demand problems.

"Significant progress has been made, and we are confident that this programme will continue to revitalise some of our most deprived neighbourhoods in the years ahead."