People on housing benefit are becoming homeless because the money is not enough to keep up with spiralling rents.

Unions, councillors and MPs today called on the Government to increase benefits to solve Brighton and Hove's deepening housing crisis.

People claiming benefits cannot afford to rent in the private sector and a dwindling stock of council housing means they are applying to be accepted as homeless by the authority.

Brighton and Hove City Council already pays out £92 million a year in housing benefits and council tax payments, almost all of which is reimbursed by the Government.

But the number of families being accepted as homeless is at a record high and the cost of putting them in temporary housing is making a big dent in the council's budget.

The city has the highest level of homelessness in the UK with thousands on the waiting list.

Brighton Pavilion MP David Lepper said the Government should rethink the funding of social housing.

Mr Lepper said there could be a case for councils to build their own houses again and to buy into the private sector to provide homes.

But he said: "That is a long-term solution. The immediate need is to help young Brighton and Hove people who cannot afford rents in the private sector.

"We need to change housing benefits so what people can pay matches the cost of what is available."

Private sector rents in the city have risen by more than ten per cent in the last 12 months.

One and two-bedroom flats are typically being let for between £500 and £800 a month, while renting a four-bedroom house is likely to exceed £1,000 a month.

Housing benefit only helps pay a property's eligible rent, a level set by a rent officer, not the market.

In high-cost areas such as Brighton and Hove, the eligible rent is often significantly lower than the actual rent, making it impossible for people on low incomes to afford to stay in their homes.

In a new report, Brighton and Hove Unison, the union representing thousands of public sector workers in the city, says: "Market mechanisms and the private sector are failing and the Government must urgently make realistic provision for a major increase in resources for social and public housing as a basic right.

"There is a huge gap between the reality of people's very expensive but poor quality housing in Brighton and Hove and the policies failing to address the need."

The report says only 15 per cent of homes are publicly owned, far less than the national percentage It says: "No meaningful funds are available to the council to buy land or property, although millions is spent on bed-and-breakfast accommodation."

Councils used to be able to spend money on building their own housing but this was stopped by the last Tory government and has not been resumed by the Labour administration.

New social housing is largely provided by associations and trusts, encouraged by councils.

Last week, the council declared homelessness its number-one priority and called on councillors to lobby the Government.

Labour councillor Pat Murphy, who chairs the council's west area housing panel, said the pressing need was to increase the amount of housing benefit.

He said the housing crisis had got worse in the past four years instead of better, which was disappointing.