The National Housing Federation says that the benefit cuts could effectively force low income families out of large parts of London and the south east.
It says its research shows that 425,000 people in London are at risk of losing their home, while 326,250 people in the south east are at risk of losing theirs.
It added that the impact of the housing benefit cuts was likely to lead to the highest number of people ending up homeless in Britain for more than thirty years.
The Federation is calling for the government to set up a poverty commission to look at the impact of housing benefit cuts on the poor.
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The scale of problems caused by the proposed housing benefit caps is revealed on the day the government prepares to publish an impact assessment of the changes introduced by the Chancellor during the Budget.
The Federation says that it is vital that ministers acknowledge just how catastrophic the changes to housing benefit could be.
In his Budget, the Chancellor imposed caps on housing benefit of £400 a week on any property with four or more bedrooms, and £250 a week for a two bedroom home.
The Chancellor also decided that instead of people on benefit being able to claim rent of up to half of the local market average rent, they will instead be only able to claim up to one third of the local market average rent.
And unemployed people who claim Job Seeker’s Allowance for 12 months will also see their housing benefit fall by 10% under the controversial plans.
Federation Chief Executive David Orr said: "If the government presses ahead and introduces harsh housing benefit cuts, more than 750,000 people would be at risk of losing their home.
"The housing benefit caps could see poorer people effectively forced out of wealthier areas, and ghettoised into poorer neighbourhoods.
"Some people affected by housing benefit caps may successfully find a home in cheaper areas, but many will end up in expensive bed and breakfast accommodation, while thousands will simply become homeless."
(CD/KMcA)
