A combination of rising levels of repossessions and unemployment, as well as housing benefit cuts, will make thousands of people homeless, according to research by Shelter.
Working families, disabled people, disabled people and carers will suffer most, with charities predicting the sharpest increase in families living in unsuitable accommodation and individuals sleeping rough since the 1980s.
Those in the capital will be the worst affected, with an exodus of poorer people from the centre to outer London boroughs.
This will add to the financial burden on local authorities, which must find homes, social care and school places for the newly arrived families.
The homeless charity, Shelter, warns that some households in London currently receiving housing benefit will have to make up a £1,548 shortfall every month to meet their housing costs.
Opposition MPs say this will lead to the “social cleansing” of poorer tenants from richer areas.
Campbell Robb, chief executive of Shelter, said: “The consequences have not been thought through by the government. If this support is ripped out suddenly from under their feet, it will push many households over the edge, triggering a spiral of debt, eviction and homelessness.”
In the UK there are 4.72m housing-benefit claimants, with one million receiving Local Housing Allowance - the housing benefit for tenants in the private rental sector.
The Chancellor’s budget imposed caps on housing benefit of £400 a week for a four-bedroom property and £250 a week for a two- bedroom home. Future rises will be tied to retail-price inflation rather than actual rents, further eroding the value of the benefit.