Chancellor Alistair Darling has been urged to invest in a national housebuilding programme to give "immediate social and financial return" to the ailing economy.
Four leading organisations have called on the Government to spend £6.35 billion over the next two years on 100,000 new social rented homes, which would create 150,000 construction jobs.
The Local Government Association (LGA), the National Housing Federation (NHF), the TUC and housing charity Shelter said housing provided an opportunity for "rebuilding economic activity".
In a letter to Mr Darling, the group said: "Investment in housing in the coming Budget would save and create thousands of jobs and apprenticeships, maintain skills in the construction industry, and safeguard our ability to build the homes Britain needs over the long term."
The group warned: "Without urgent action, the desperate need in this country for housing to meet people's needs, expressed in your commitment to build three million homes by 2020, will not be met."
The collapse of lending and house prices had led to a "severe drop" in housing supply which posed "serious challenges" for the housebuilding industry, the group said.
The construction industry could contract by 20% by 2010 with a loss of around 447,000 posts, it added.
The letter states: "A loss of construction jobs and apprenticeships now would have longer-term effects.
"Experience from the 1990s recession is that housebuilding does not automatically bounce back when the market recovers."
The number of households on social housing waiting lists in England has increased by more than 70% since 1997 and it is estimated there will be five million people on the waiting lists by 2010, the group said.
