Labour's affordable homes policy is not working for low income families, a rural housing charity chief claimed.

Moira Constable, of the Rural Housing Trust, said shared ownership schemes aimed at key workers were not the whole answer and the previous Conservative Government put more money into small village housing schemes than Labour.

Ms Constable told a Labour Party conference fringe meeting on rural revival: "We have to put more money into rented housing. It pains me to say it, but until 1997 the Housing Corporation was funding around 2,000 houses a year in small villages.

"It's now funding about 750 a year and this is an increase since 1997.

"This doesn't please me, that as a member of the Labour Party I find that funding for the job that I have dedicated practically my whole life to, has been cut.

"It has been increased since the cuts, but it's nowhere near the level that the previous Government was investing in affordable housing in villages and that's a difficult thing for me to live with."

Ms Constable said she had a "Doomsday scenario", adding that if the policy continued: "We are going to have the worst form of divisive policy, we are going to have the villages becoming enclaves for the very rich. And those people who are working in the very low income jobs - who are providing services in the NHS, the electricians and roofers who maintain the houses of the very rich - they are all going to be shunted into what little housing there is available in the major towns." She also hit out at Government promotion of sustainable public transport like buses instead of cars, adding if workers needed to go out to the villages "it ain't going to be by bus, it's going to be by car, we are not cutting down on car usage.

"We have to decide whether small rural communities are the preserve of the rich with their detached five-bedroom, triple garage houses where they can have as many cars as they like. But if you want to build a new development of affordable housing for local people, the planners will come down on you and say only one and a half cars per dwelling, the big detached houses can have as many cars as they like in their drives."

Rural Affairs Minister Jim Knight, who also attended the meeting, said he listened carefully to Ms Constable.

"I agreed with much, but not all of what she said, and I am probably not allowed to agree with all of it. But housing is undoubtedly the biggest challenge we face in rural England.

"We have ended the 50 per cent discount for homeowners on council tax, but we have accepted that there is more to do. The problem is growing."

Mr Knight said the new Affordable Rural Housing Commission met for the first time this week under former Channel 4 political editor Elinor Goodman. It is due to report to Ministers by Easter.

Mr Knight admitted the hunting bill had "driven a wedge between the rural areas and the majority in the urban areas".