The Office for National Statistics (ONS) said that demand for new construction fell from £8.3bn in the fourth quarter of 2007 to £7.7bn during January to March this year.

It added that £1.44bn worth of private housing was started during the period, the lowest figure since the final quarter of 2000.

The figures come a week after one of the UK's largest housebuilders Persimmon, said it was putting new projects on hold, after reporting a 24% drop in sales during the year so far.

Taylor Wimpey has also said its orders since January were 26% below last year, with trading falling off since March as first-time buyers faced particular difficulties in securing mortgages.