Established British families should be given social housing even if they need it less than new immigrants, a government minister said yesterday.

Margaret Hodge said that indigenous families’ “legitimate sense of entitlement” should be taken into account in deciding who was housed.

Ms Hodge, an Industry Minister, has called before for the Government to do more to counter the resentments created by immigration.

Yesterday she suggested that national insurance contributions could be used as part of a points system of housing allocation.

She said the Government currently “prioritised the needs of an individual migrant family over the entitlement that others feel they have to resources in the community”.

She added: “So a recently arrived family with four or five children living in a damp and overcrowded privately-rented flat with the children suffering from asthma will usually get priority over a family with less housing need who have lived in the area for three generations and are stuck at home with the grandparents.”

Hazel Blears, Labour’s chair-woman and a candidate for deputy leader, agreed that ministers had to do more to convince people that the system was equitable. “I think that people in this country have a real sense of fairness. They are prepared to do their bit but they want to know the system actually works for them. So I do think we need to tackle these tough issues.”

However, Nancy Kelly, of the Refugee Council, a campaigning group, said that Ms Hodge was aping the BNP. “The way to counter some of the views that are put forward by the far-right parties is not by trying to follow their lead.”

Ms Kelly said that asylum-seekers were not entitled to council housing and arrivals from new EU states had restricted access to benefits. “People who are recognised as refugees are entitled to council housing but on exactly the same basis a UK national, on the basis of need,” she said.

Ms Hodge, an immigrant herself – she was born in Egypt to Jewish refugee parents – said that she had seen many voters in her Barking constituency turn to the BNP because of concerns over housing allocations.

She said a transparent points system, giving more weight to length of residence, citizenship and national insurance contributions, could be a better way of allocating housing.

Writing in The Observer, she said that there was widespread concern about the changing face of Britain, and people needed to be reassured. “We should look at policies where the legitimate sense of entitlement felt by the indigenous family overrides the legitimate need demonstrated by the new migrants. We must address these difficult questions.”

Damian Green, the Conservative immigration spokesman, said that Ms Hodge’s comments acknowledged the Government’s “long-term failure” to control immigration.

Andrew Stunell, the Liberal Democrat local government spokesman, said that the Government was continuing to sell council houses although there were 1½ million families on the council housing waiting list.

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