The government has insisted it was still on track to shortlist up to 10 potential eco-town locations by early next year. Ministers have denied media reports that the Government was winding down the initiative.

A Communities and Local Government (CLG) spokesman said: "The extra homes of eco-towns are still needed and the challenge of climate change is not going to fade, irrespective of economic conditions.

"We have consistently said we are looking to build up to 10 eco-towns and have made clear that we will shortlist up to 10 potential locations by early next year."

When Housing Minister Margaret Beckett was quizzed by MPs at a CLG select committee on Monday, she said the eco-town programme remained a "hope" and called the target to build three million new homes by 2020 as "an ambition".