3.4 million households across the UK are living on a “financial cliff-edge”, where a small drop in income could cost them their homes, new figures reveal today.

Analysis of government data by the University of St Andrews, on behalf of the homeless charity Shelter, reveals that one in eight low-income families are living with unaffordable housing costs.

Statistics also show that one in ten working families have been forced to sell possessions to pay the rent or mortgage.

Average rental costs in the UK currently stands at £694 a month but rents in London have soared to £1,412 a month – more than twice the national average.

Rent has also become less affordable in the South-west and South-east of England, where average income is 2.55 times and 2.93 times the median national average respectively.

Mum of two Lou, 42, works full-time but still struggles to cover housing costs.

“Even though I work every day and live in a small flat, the rent eats up so much money that it’s almost impossible to make do with what’s left over each month, and I can’t move because there’s nowhere else remotely near to work I could dream of affording”, she told Shelter.

“I’ve had to borrow money off my friends and family to cover my rent, and I’m always making tough decisions on what I can and can’t afford for my youngest. Things have got so bad that I’ve even missed paying bills because I had to put food on the table, and that’s when the debts start to mount up.

“It’s such an uphill battle. I’ve faced losing my home before and I live in dread of having to go through that again. The idea of losing my job just doesn’t bear thinking about.”

The Housing Benefit bill for working families is set to soar by more than £1 billion by 2018. Years of lower than inflation wage rises, and the lowest ever levels of house building, have resulted in a rising number of households who are struggling to cover housing costs.

Campbell Robb, Shelter’s chief executive, said:

“Every day at Shelter we hear from people who, through no fault of their own, are finding it impossible to keep up with sky-high housing costs. It’s terrifying to think that many of us are resorting to avoiding bills or selling possessions in a desperate bid to make ends meet.

“The government must make sure families who are already battling to keep their heads above water don’t slip through the growing holes in our safety net, and into a downward spiral which could result in the loss of their home.”