Figures from the National House Building Council (NHBC) show applications to start new homes in October fell by 65% over 12 months, from 16,895 last year to 5,893 this year.

In the three-month period from August to October there were just 19,548 applications to start new homes compared to 51,608 in the same period last year.

Applications to start new private homes dropped to 11,507, down 73% on a year earlier. Housing association figures were 5% down, at 8,473.

New build completions also fell with a drop of 24%  in the three month period leaving just 33,771 finished.

The NHBC says the situation will worsen as it anticipates as few as 85,000 homes being registered in 12 months to the end of March 2009.

This compares to the 184,000 recorded in the same period last year and will represent the lowest annual figure recorded since the early 1980s when NHBC's records began.

NHBC's chief executive, Imtiaz Farookhi, said: "In the face of such a stark decline in new home volumes, we are at serious risk of losing a generation of skilled workers, as experienced in the 1990s.

"It is vital that we work to maintain capacity so that when the upturn comes, which it inevitably will, the industry will be able to respond to housing demand."