Beleaguered housebuilder Taylor Wimpey is in fundraising talks with investors to cope with a "significant downturn" in the housing market.
The group - looking to raise £500 million to shore up its finances, according to weekend reports - said it was likely to gain the funds though a placing and open offer of new shares.
But the firm added that it was set to write off £660 million on the value of its land bank and work in progress due to the tough market conditions.
It said: "Taylor Wimpey came into the year with a cautious outlook on the market and this has been borne out by recent experience. While the US market is showing signs of improving stability, in the UK market it has become apparent that we have entered a significant downturn."
Taylor Wimpey said it was "moving proactively" to put a financial structure in place to withstand what it fears will be "sustained" weakness in the UK housing market.
The firm remains within the terms of its banking covenants, but has amended a condition based on the link between its interest payments and underlying earnings in favour of a measure of its ability to generate cash.
The change will "protect against the risk of further deterioration", although it is dependent on Taylor Wimpey raising the additional funds from investors.
The update from Taylor Wimpey comes ahead of a scheduled trading statement due on Wednesday amid speculation about its financial health as the housing market slumps.
The firm - formed through the merger of Taylor Woodrow and George Wimpey a year ago - has seen its share price slump and been relegated from the FTSE 100 Index alongside other major builders such as Persimmon and Barratt Developments.
Taylor Wimpey has been hit hard by the US housing slowdown crossing the Atlantic with increasing pace.
Of the writedowns announced today, the lion's share - £550 million - relates to the UK market. The group has also taken a further £70 million hit in the US and £40 million in provisions on its Spanish operation.
