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Nearly half of councils have seen a rise in housing benefit claims since the economic downturn and a quarter have found more homelessness.

A survey of 155 local authorities by the Local Government Association found that 45 per cent had already experienced an increase in housing benefit applications, and another 45 per cent expected numbers to go up soon.

And 56 per cent of councils expected more people to become homeless in their areas, with another 25 per cent already experiencing a rise.

Nine out of ten councils said more people were expected to seek debt or welfare advice, or had already done so.

Margaret Eaton, chair of the LGA, said councils were experiencing a ‘huge uptake in services’.

‘The research reveals the extent to which people and businesses are feeling the pinch,’ she said.

Many councils also reported plummeting numbers of planning applications – 60 per cent of councils said applications for major building projects were down, and 70 per cent saw a drop in minor plans.

And 86 per cent of councils said the economic downturn would make it harder to hit their Local Area Agreement targets. Housing and employment were the main concerns, with 80 per cent considering housing targets ‘more difficult’ to reach.

‘At this time of repossessions and redundancies, even more people need the vital support that only councils can provide. Town halls are taking decisive action to protect local people and businesses from the worst effects of the recession,’ Ms Eaton said.

The survey was carried out in November for the Improvement and Development Agency and the Society of Local Authority Chief Executives and Senior Managers.