House builders have rebutted John Prescott's suggestion that they are the "most inefficient in the world" - by firmly directing the blame for the UK's housing shortage at the planning system.

They claim that if planners and committees did not veto, or delay the approval of, many applications for housing developments there would be a sufficient supply.

The real inefficiency resulting in Britain's housing crisis lies in the planning system

Pierre Williams House Builders Federation

The deputy prime minister is set to announce new planning measures which will force developers to provide more houses on smaller sites in the south.

He will outline his version of a new kind of housing provision at an urban summit in Birmingham on Thursday.

He is set to call for a movement away from desolate housing estates and towards well-designed communities with parks, schools and health centres.

Builders' challenge

Prime Minister Tony Blair added his weight to the debate on Wednesday by stressing that the building industry faced challenges in relation to skills and land.

He told the Commons it was important that builders "build the housing that we need, particularly in the parts of the country like the south-east where those houses are needed".

Prescott wants communities not housing estates

Mr Prescott will challenge builders, who he describes as the "most inefficient in the world", to construct more homes on small spaces in areas where there is the greatest demand.

"I want something for the millennium which would be identified as strongly as the new towns: a community and not a housing estate," he told The Guardian.

His plans are part of action needed to respond to the numbers of workers in the public sector who are priced out of the housing market.

'Anti-house building lobby'

But Pierre Williams, spokesman for The House Builders Federation, said the trade federation for private house builders in England and Wales had a completely different perspective on who was to blame for the housing deficit.

"The real inefficiency resulting in Britain's housing crisis lies in the planning system. It alone, decides whether homes can be built or not," he said.

"The fact that Britain now has more households than homes for the first time on record... is the result of widespread anti-house building lobbying at local level and government's failure so far to ensure local authority planning departments allow sufficient development to go ahead.

"The reality is that we just need more housing and above all, a planning system that allows it to be built.

"The deputy prime minister has promised to act, but until that happens, many planning departments will continue to drag their feet.

"The fact that one of the world's richest nations cannot house its own population is a disgrace, as is the failure of a succession of governments to tackle the nimby - not-in-my-backyard - element that has produced this crisis."

Higher densities

Mr Prescott has already made it clear that he wants to see a big expansion in house building in the south-east of England.

The plans could lead to 200,000 new homes being built in the region over the next five to 10 years, with thousands of subsidised properties for key workers such as nurses and teachers.

He is alarmed that despite new planning guidelines, too few houses are built per hectare.

On average, about 20 houses are built on each hectare.

In an attempt to offer a carrot to builders to adopt his vision, Mr Prescott is considering giving builders long-term contracts to redevelop land.

Better designs

He is also hoping to encourage the industry to build faster and to use prefabricated methods that enable houses to be built in factories.

He insists that higher density developments should be an attractive a proposition to the building industry, especially coupled with better design.

Mr Prescott argued that house prices "are far greater than people's earning capacity".

"I've got to address that and I just can't do it by fiddling around with a few spaces in town, altering the [social] housing provision in planning agreements [with builders].

"I must do it with a much more ambitious step-change: pick my growth areas, choose my priorities, get the resources, beef up planning and start working towards what I call sustainable communities."