Gordon Brown will hold talks today with mortgage lenders amid growing evidence that the downturn in the housing market could be worse than that of the early 1990s.

The Prime Minister is expected to urge banks to help to shore up the housing market by easing loan costs, passing on cuts in base rates by the Bank of England to borrowers and being less tough on buyers in distress.

The talks will be given fresh urgency by today’s housing market data from the Royal Institution of Chartered Surveyors, which suggests that a vicious downturn in the property market is gathering pace.

The proportion of surveyors across the country reporting that house prices fell last month reached the highest levels on record. Some 78.5 per cent more surveyors said that house prices fell in March than reported increases, up from a net figure of 65.7 per cent in February and higher even than in June 1990, the institution reported. The monthly poll began in 1978.

Fears that the deepening housing market woes will trigger a broader crunch in spending will also be fuelled today by key figures that show high street sales falling for the first time in two years.

Consumers, squeezed by weak income growth, soaring food and fuel prices and falling house prices, which have hit confidence, retreated from the shops last month, according to the British Retail Consortium. The like-for-like value of takings at the nation’s tills tumbled by 1.6 per cent in March, compared with levels a year earlier, after factoring in extra retail floorspace, the consortium said.

Living standards were threatened with an even harsher squeeze onliving standards as cost pressures for manufacturers soared, according to official figures. This could result in further increases in high street prices. Prices for goods leaving factories last month were 6.2 per cent higher than those a year ago. It was the steepest increase for nearly 17 years. Industry costs for raw materials surged last month to 20 per cent higher than those a year ago — a record gain.

Experts said that retailers would struggle to pass on rising prices to shoppers and be forced to accept lower profits, piling pressure on their businesses and potentially forcing job cuts.

The Tories will seize on the news to hammer home their assault on Gordon Brown andthe Chancellor over the way in which the economy is being run. Yesterday they focused their attack on the housing market. George Osborne, the Shadow Chancellor, mocked the Prime Minister’s claims to have tamed the ups and downs of economic cycles as “the high-water mark of hubris”.

Mr Osborne hinted that a Conservative government would give the Bank of England new powers to regulate the supply of credit, suggesting that it could vary rules on how much capital high street banks were forced to hold to help to prevent excessive booms.

Mr Brown defended his record as he campaigned alongside Ken Livingstone, the London Mayor standing for re-election, insisting that “we are taking exactly the right decisions”.

But he is likely to encounter a rough ride from lending institutions at Downing Street today, with bankers likely to reject his allegations that Bank of England rate cuts are not being passed on as simplistic and unfair.