An insurance company says it will no longer offer cover to owners of houses at serious risk of flooding.

Owners of houses built on flood plains or in areas prone to repeated flooding will no longer be able to get cover from Internet insurance company esure.

The company said the move could cut costs for millions of householders by limiting the locations it will cover to keep the cost of the flood risk element in home insurance policies to a minimum.

Hundreds of properties, particularly in Lewes and Uckfield, were flooded for days and even weeks during the storms of autumn 2000.

Esure said the change in its policy would come into effect immediately. It could save homeowners not deemed at risk about £30 a year.

The company said industry figures indicated that the cost of home insurance cover across the UK was inflated by between five per cent and ten per cent as a result of the flood element.

Only ten per cent of households in the UK are in areas at significant risk of flooding and even fewer are at risk of repeat flooding.

At the end of 2002, the two-year flooding moratorium under which insurers have agreed to continue providing flood insurance cover to domestic and small business customers, expires.

The insurance industry said it had constantly warned government of the need for greater spending on flood defences and better co-ordination of flood planning following the severe floods of recent years.

Peter Graham, chief executive at esure, said: "Esure is entirely sympathetic to homeowners who live in flood risk areas or on flood plains, but they have been let down badly by years of Government failure to improve the UK's flood funding, planning and defences.

"Following severe localised flooding in recent years, we believe that the dry majority is now being unfairly penalised through their high home insurance premiums on account of the failure to address the problems facing houses built in flood risk areas and we will be calling, along with the industry, for improvements to both the funding and co-ordination of flood protection."

Lewes district councillor Graham Mayhew said: "People living on flood plains should have a right to get cover.

"It is a difficult one to handle, because those who aren't at risk shouldn't have to pay higher premiums.

"One would have thought the more sensible arrangement would be to quantify the risk and charge people on flood plains more."

But he said the role of the Government was as important as that of insurance companies.

He said: "The long-term solution is to improve flood defence systems in places liable to flooding. Unfortunately there seems no great sign of that happening soon in Lewes."