The Government’s reforms to welfare payments could leave the country’s poorest families homeless with house moving increasing deprivation in high rent paying areas, according to the Chartered Institute of Housing.

Research conducted by the housing body for the Guardian reveals that changes to restrict welfare benefits payments will leave claimants with shortfalls in their rent payments leaving more than 800,000 homes out of reach to low income families.

It also suggests capping housing benefits payments to rents paid in the cheapest third of lettings and the introduction of absolute benefits caps from January 2012 will lock out people choosing where to live.

Grania Long, interim chief executive of CIH said: ‘The only feasible option for many families who want to stay in their communities will be to borrow more or to spend less on essential items such as food.

‘This could mean more than 1.3 million private tenants face the new year with dread, confronted with an uncomfortable prospect of homelessness or debt. Low income families could move to more affordable areas, creating “Benefit Ghettoes”, and resulting in increased social disorder and a breakdown in community cohesion.’

Figures show cuts will affect all areas of the UK, with an estimated 250,000 homes out of reach within London and the South East.

The research also suggests there will be more tenants than available homes within Local Housing Allowance rates for those relying on housing benefit.

The Government announced changes to the LHA early last year including a limit of £290 a week for two bed and £340 a week for four bed properties respectively.

From January 2012, the rate for those renting a private one-bedroom property will be extended to tenants under the age of 35 with a number of other changes proposed from 2013.