British Labour MP John Cruddas and Lib Dem Simon Hughes said policymakers had failed to recognize BNP gains were linked to anger over who gets homes. Cruddas said these tensions were worsening because of a "vortex" of falling wages in a "race at the bottom of the labour market".

The MPs warned tensions over homes were "off the radar" of government. Mr Cruddas, MP for Dagenham, said the British National Party was on the rise because people believed immigrants got preferential treatment over housing, a perception made worse by the arrival of cheap Eastern European workers.

A complete lack of reliable statistics on London's massive population upheavals meant it was impossible for policymakers to plan for sudden demographic changes, or explain them to the public. The result was a situation ripe for exploitation, he said.

“This is completely off the radar of policy making," said the MP. "There is an extraordinary process of change going on. Housing is increasingly the frontline. Unless we can deal with this, we cannot deal with far right extremism.

"We have heard things like the council is paying £50,000 to black families from Tower Hamlets to move into homes. It is very difficult to put that stuff back in the bottle." The BNP became the second largest party on Barking and Dagenham Council earlier this year after winning 12 seats. The party is understood to be presently trying to table a motion to restrict council home allocation to people born in the borough, although a spokesman was unavailable to confirm this.

The BNP's website says housing policies over 40 years have meant "indigenous white working class families ... were sent to the bottom of the housing lists - so that homeless immigrants that just entered the country were prioritized for any vacant housing in the area".

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