Council tenants in Brighton and Hove may soon lose their right to buy their homes at knock-down prices after the Government recognised the city's housing shortage.

The city has been reclassified as an area under greatest pressure from spiralling council waiting lists and house prices.

Now the council will be allowed to limit the right to buy council houses at huge discounts to cut the loss of council housing at a time when families face long waits for a home.

The authority was excluded from the original list of 41 areas allowed to slash the maximum discount available to tenants by £22,000.

But the Office of the Deputy Prime Minister has introduced a new test - the link between incomes and housing prices.

This has seen the city added to the list of areas which could benefit from limiting the cheap sale of council homes.

The ODPM said those areas taking part in the scheme were being kept under "constant review".

Insiders said an application from the council to take part would be treated in positive light.

Limiting the right to buy prevents council tenants in property hotspots from purchasing their homes cheaply and then sub-letting them for an increased rent.

Property developers have also been contacting council tenants and urging them to exercise their right to buy.

They offer to pay the tenant substantially more money to sell the property on, before putting it on the market themselves for an even higher price.

This has led to a reduction in the amount of social housing available for low-income families.

Brighton and Hove had appeared certain to qualify in the original list of 41 authorities, where the maximum reduction on council house discounts was cut from £38,000 to £16,000.

But on homelessness and house prices alone, other areas were considered to have bigger problems.

The average monthly rent for a one-bedroom flat in the city is now £613. To get a £110,000 mortgage would require an income of around £30,000 a year - but the average household income in Brighton and Hove is about £20,000.