Seventeen councils reported fewer applications

She acknowledged that government policies had helped - but asked how many people were eventually found permanent homes.

The latest Housing Trends Bulletin, which was published on Thursday, contains details of families with children living in temporary accommodation for the first time.

According to the bulletin, there were 4,078 households living in such accommodation at the end of September last year - a rise of 2% on the previous year.

This includes hostels and bed and breakfast establishments.

Of those households, just over 1,600 included dependent children - accounting for almost 40% of the total.

The fact remains that, despite all the hype and spin, homelessness rocketed to record levels under Labour

Keith Harding, Tory MSP

There were 11,204 homeless applications recorded in September 2000, compared to 12,007 the previous year - a fall of 7%.

Seventeen local authorities reported a drop in applications, including Aberdeen, Fife and Glasgow - which has the largest number of applications in Scotland.

Ms Baillie said: "Tackling homelessness remains a top priority for the Scottish Executive and I am optimistic that the steps we have taken and the funds provided are beginning to have a positive effect.

"And we will ensure that our policies are targeted to deliver long-term and sustainable solutions to the scourge of homelessness.

"Our pledge is to ensure that no-one has to sleep rough by 2003. That is why we have invested �42 million in the Rough Sleepers Initiative over a five year period."

But the Scottish Tories' local government and housing spokesman, Keith Harding MSP, said: "The fact remains that, despite all the hype and spin, homelessness rocketed to record levels under Labour.

Failing the homeless

"All this from a government that promised to do everything in its power to end the scandal of homelessness.

"Things have got worse, not better, during Labour's tenure in office."

Earlier this year Shelter said the Rough Sleepers Initiative was failing homeless people in Edinburgh.

A report said heroin use among homeless people in the capital had doubled in a year and said there were 105 fewer hostel beds than in 1997.

A spokesman for Edinburgh Council was "surprised" by the criticism and said the initiative had been a great success.