Ministers have ordered an investigation into Birmingham's housing policy following a damning report by an independent inquiry.

Local Government Minister Yvette Cooper announced the investigation in a statement to the Commons, but Birmingham City Council's housing chief accused her of talking "nonsense" and electioneering.

Councillor John Lines, the council cabinet member responsible for housing in Birmingham's Conservative-led council, said: "Yvette Cooper ought to get her facts straight. This is nonsense and I can only assume she is being party political ahead of the local elections.

"We are working very hard in Birmingham both for our tenants and with the housing associations, and maybe she ought to come down and look for herself - I should be delighted to show her what we are doing."

Ms Cooper said Ministers in her department, led by John Prescott, the Deputy Prime Minister, were "concerned" at Birmingham's failure to create more low-cost homes. The council should be working closely with housing associations but, instead, it was working against them, she claimed.

Her comments followed the publication of a report by the Independent Housing Commission, chaired by Professor Anne Power of the London School of Economics, which warned Birmingham faced "critical gaps" in its housing policy.

The council took the decision to involve tenants' associations in housing management, after residents rejected proposals to transfer stock to a private landlord in 2002.

However, it has now changed its policy and was attempting to manage housing centrally, Prof Power said.

Ms Cooper said: "Anne Power's report was very critical in regard to the approach taken by Birmingham City Council."

Challenged by Yardley MP John Hemming (Lib Dem), she said: "He ought to raise with Birmingham City Council the need for them to work with housing associations."