A council may become the first in England to lose control of its own housing stock because it is failing thousands of residents.

The Audit Commission says Chester-le-Street District Council in County Durham has failed to improve an already sub-standard service.

Now the commission says it has asked the government to consider taking direct control of more than 5,000 council homes.

Council officials say they accept its housing service needs "urgent attention".

Serious weaknesses

The Audit Commission paints a grim picture of the service provided for 5,300 council households.

It is the second damning report in 18 months and the commission says management is poor, and in some areas, worse than before.

Serious weaknesses include failing to attract a potential �2m in housing grants, high rent arrears, repeated suspension of the repair service and making council tenants bear the full cost of installing security cameras.

If central government does intervene, it will be the first time for any local authority housing department.

Chief Inspector of Housing Roy Irwin said: "The failures we have found at Chester-le-Street are very serious.

Minimum resources

"Housing service users are being consistently failed by the council in the provision of a basic level of service to which they are entitled.

"The council has not adequately addressed these failings or put in place changes and plans that will ensure things move forward".

Council leader Malcolm Pratt said: "If the secretary of state finds it necessary to intervene, then we will be more than happy to give our total support to whatever decision he makes.

"It is worth pointing out that we are a small council with minimum resources and that we are currently involved with major housing projects."