The £21bn cost of subsidising mortgages and rents to low incomes families could be almost halved when the government passes legislation to ease planning rules and allow more house building, the Institute of Economic Affairs (IEA) said.
The number of people claiming housing benefit has increased by 780,000 since the beginning of 2009 to 5 million.
The IEA said that only when property developers and local communities  have the freedom to build more homes will the cost of housing begin to fall.
The thinktank warned that lobbyists campaigning for increased government spending on housing benefit and tax credits wanted an expensive, taxpayer-funded fix that failed to tackle the long term problem of unaffordable house prices and escalating rents.
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