The Government risks repeating the mistakes of the 1950s by creating new towns without a diverse employment base or adequate community facilities if it forces the West Midlands to build more than 400,000 new homes over the next 20 years, it has been claimed.

Regional Assembly chairman David Smith said he feared the rise of a modern-day equivalent of the post-war coal or mining towns, reliant on a single industry, or the creation of dormitory towns for commuters.

Councillor Smith, the leader of Lichfield District Council and chairman of the West Midlands Local Government Association, said he was concerned at the number of new properties the region was expected to find space for.

The regional assembly, which represents all 38 councils in the West Midlands as well as business and community interests, said last year it could build no more than 360,000 dwellings without intruding into green field and green belt land.

Councillors feared the high numbers demanded by the Government would result in a stampede to build in desirable rural areas, while resulting in further decay and population drift away from towns and cities.

But the department for Communities and Local Government is insisting on at least 400,000 new homes as part of a drive backed by the Prime Minister to build three million new properties across the country.

Speaking at the assembly's annual meeting yesterday, Coun Smith said he believed the Government was looking to set up a regional housing board after 2010, when the regional assembly is to be abolished.

"Every house we build has to be ecofriendly. We cannot afford to consume fossil fuels at the rate we are doing," Coun Smith said. "I believe eco towns will become the modern steel or mining towns based on single industries or will become commuter towns."

But his fears were dismissed by West Midlands Minister Liam Byrne, who said there was a need for one new dwelling to be built every half hour over the next two decades if demand for housing was to be met. Councils had a duty to plan for new communities with better schools, health centres and transport.

In his keynote speech to the annual meeting, Mr Byrne said local authorities and partners in the region were now working more closely together in pursuit of a common agenda than had ever been the case in the past. He issued a plea for greater recognition of the diverse quality of society in the West Midlands, adding that people had a "right to be different" and to lead their lives as they saw fit.

He also called for better political leadership and a "new era of civic inventiveness" to match the success of local government at the end of the 19th century.

Former Transport & General Workers' Union boss Lord Bill Morris, now the Chancellor of Staffordshire University, echoed Mr Byrne's call for more housing.

He said: "One of the great opportunities will be the Government's housing programme. That will give us economic prosperity and social justice and enable us to transform communities and improve people's lives."