Insurance premiums will soar unless the Government stops building on flood plains

The Association of British Insurers said a third of three million new homes that Labour plans to build by 2010 will be at risk of serious floods.

Despite the horrendous floods of the last year - which caused £3 billion damage, killed more than a dozen people and left thousands of people homeless - town halls are still ignoring the advice from experts and giving the go head to flood plain developments.

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The ABI's assistant director of property Justin Jacobs said: "The Government's ambitious housing plans are in jeopardy unless we reduce the flood risk.

"In the last year, 13 major developments have been given the go-ahead despite Environment Agency advice on the flood risk. Where a local authority plans to ignore flood risk advice, the Government should step in and review the proposals and be compelled to publish their decision.

"Insurers want to continue to provide flood cover, but poor planning decisions will lead to more homes becoming unsaleable, uninsurable and uninhabitable."

Seven of the sites earmarked for major developments are a high risk from flooding, he said. They include a new caravan park and an estate of bungalows.

Although local councils have to consult the Environment Agency about new developments, the agency's warnings about flood risks are often ignored.

The Liberal Democrat housing spokesman Lembit Opik said the Government's plans were flawed.

"Building millions of new homes on flood plains is clearly not the answer. We must not leave poor families who have scraped together enough money to buy a house uninsured and unprotected," he said.

"Instead, more use should be made of brownfield sites as well as unused public sector land.

"Ministers must also ensure that empty homes are brought back into use, including the million empty homes above shops and commercial premises, which could be used to make sure that no families are left homeless."

But Housing Minister Iain Wright said the insurance industry's claims were "completely wide of the mark".

"The Government has introduced the strongest planning rules ever to ensure councils properly manage the risk of flooding," he said.

"It is up to councils to decide whether to give planning permission for new housing development, but these rules mean they must consult with the Environment Agency before allowing new building in flood risk areas.

"We are prepared to use our powers to take over decisions if required, however all of the developments highlighted by the ABI were decided by councils before the introduction of these planning protections."