Plans to build 160,000 new homes as part of a massive regeneration programme in the South East may not got ahead, says the National Audit Office.

The office blames Ruth Kelly’s Communities Department for failing to produce a coherent plan for the Thames Gateway programme. The project, which has already cost £7bn, involves ‘ambitious transport’ and housing development from Canary Wharf to the mouth of the Thames Estuary.

The audit office claims that the government will miss its target of 160,000 new homes by 2016 unless it doubles the building rate. Only about 24,000 were built between 2001 and 2005.

Edward Leigh, chairman of the Commons Public Accounts Committee, said: “This ambitious vision is looking more and more like an expensive daydream.”