A leading Birmingham housing organisation has been given just a one-star rating from the Audit Commission.

Hockley-based Midland Area Housing Association, which manages around 4,500 homes in and around the city, was told it needed to improve.

On a scale from zero to three stars the inspectors said rent arrears were too high and its response to repair work needed attention.

However services were accessible and flexible enough to respond to the diverse needs of customers, homes were being improved to a high standard and gas servicing.

Midland Area is a charitable housing association and part of the Keynote Housing Group.

But there was some optimism in the report.

Ann Bennett, the Audit Commission's lead housing inspector for the West Midlands, said: "Our assessment of Midland Area's services revealed excellent prospects for improvement."

Olu Olanrewaju, managing director of Midland Area, said: "We are delighted with the findings of the inspection - its observation of our current position and potential to excel in the future is extremely encouraging and offers a helpful focus in our work towards becoming a centre of excellence by 2008.

"We have completely over-hauled our operations to achieve a much higher standard of service. "Our customers can rest assured that they will benefit from our continuous efforts to improve and we will be addressing all the issues raised by the inspectors."