Fears were growing last night over the financial health of some of Britain's largest housing associations.

Vince Cable, Liberal Democrat Treasury spokesman, asked the Government in the House of Commons what it proposed to do about those facing “grave financial difficulty” and in “danger of collapse” .

Commons leader Harriet Harman replied that capital investment in the social housing sector had been brought forward for this reason.

Mr Cable’s demands followed an admission on Tuesday by the Tenant Services Authority (TSA), chief regulator of housing associations, that six were on its watch-list .

Documents posted on the Housing Corporation web site show that the Peabody Trust and the Shepherds Bush Group carried a regulatory health warning earlier this year. These were still being displayed last night. In these latest assessments in March and January respectively, they were each described as having financial exposures “which make it vulnerable to deterioration.” The Peabody Trust, was also given just one star out of three.

A spokesman for the Peabody Trust, said that the trust was vulnerable to pressures on the open housing market because of the fall in house prices but denied it was one of the six mentioned by the regulator as facing difficulties. The association, founded in 1862 by the American banker and philanthropist George Peabody, has 17,500 homes across London.

The West London YMCA, which owns 457 units, and the Shepherds Bush Group, which owns 4500 units, also received warning in their last assessments but denied they were one of the six. The Shepherd’s Bush Group said that their previous overexposure was due to loss-making health facilities, which they have since closed

Mr Cable told The Times last night: “Housing associations got into bed with developers to promote shared ownerships schemes but now they can’t dispose of those properties. They run the risk of going bust, or at the very least of having to merge with a healthier association.”

David Orr, chief executive of the National Housing Federation, claimed that many banks are preventing associations from cost-cutting restructuring moves by fines for breaking their original covenants.

Margaret Beckett told the Communities and Local Government Select Committee this week that many banks are racking up the cost of borrowing for housing associations, who traditionally enjoy preferential rates.

Ujima became the first housing association to go under in January this year, when it was taken over by the London & Quadrant Group.

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