The Times (p14) reports that the government expected 3.8 million new homes by 2021 instead of 5 million, as had been widely anticipated.
The the lower figure comes as a result of a rethink on how many single and divorced people will live together.
However, Mr Prescott said that planners and councils should not be complacent and should be trying to direct more homes on to abandoned inner city sites.
Mr Prescott admitted that it could take 25 years for the new regional development agencies to generate the economic growth needed to lure significant amounts of industry and workers from south-east England to other parts of the country.
He said it was now up to councils to come forward with fresh household plans, and he urged local authorities to be 'more flexible'.
The government yesterday said that despite a reduction in the household forcecasts it had not changed its estimate for the number of new houses expected to be built in rural areas.
But sources within the department of the environment, transport and the regions indicated that these figures might change when a task force studying the potential for re-using brownfield sites reports in a few weeks' time.