Labour has called for all areas to receive greater Government backing after Whitehall shifted the focus of its housing cash.

A new Ministry of Housing, Communities and Local Government policy paper quietly published last month revealed Whitehall has earmarked at least 80% of £7bn cash from five key housing programmes for projects in areas facing the highest affordability pressure, leaving just 20% for the rest of the country.

One local government expert suggested Whitehall was ‘withdrawing support for some of the most challenged parts of the country' and the policy would ‘unquestionably widen the north-south divide'.

They said the policy would protect London and the south-east while areas with some of the highest concentrations of Brexit voters would lose out, adding: ‘This is essentially the Government pulling up the drawbridge.

'It is quite explicit.

'My understanding is that this is a very significant but understated development driven by the Treasury and Philip Hammond.

‘With Government focused elsewhere it does become harder, but waiting for Government to sort the problems of the poorest parts of the country is not the right solution.

'What it requires is for folk to look for their own solutions.

‘I'm not surprised the Government isn't shouting about it from the rooftops.

'Presumably, the Government is anxious about how this is going to go down.'

Labour's shadow housing secretary, John Healey, said: ‘There's now a housing crisis in every part of the country.

'Yet Conservative ministers still have no plan to fix the crisis and deep cuts to housing investment since 2010 have led to the lowest level of new social rented homes since the Second World War.

'All areas need more backing to build.'

Greater Manchester mayor Andy Burnham said the policy would 'fuel the economy where it is already strongest' and called on the Government to 'think again'.

He said: 'It is simply indefensible to shovel billions of pounds of public money into the more affluent areas when all parts of England are facing a housing crisis. 

'Such a skewed distribution of public money is demonstrably unfair and unacceptable.

'Right now, the Government should be working hard to bring our country back together rather than widening its economic and social divides.' 

Greater Manchester Combined Authority's lead on housing, Paul Dennett, added: 'It is perverse for Government to continue channelling new investment into the wealthiest areas of the country while leaving the north of England and the Midlands to wither on the vine.

'By crudely prioritising investment as proposed, Government risks perpetuating and reinforcing the divides between different parts of the country, and failing to recognise the very real challenges of affordability and poor housing choices facing households across England as a whole.'

Privately, even senior Conservative councillors concede that the policy will ‘cause some tension'.

Chief executive of Conservative think-tank Localis, Jonathan Werran, said the policy made ‘eminent sense from a purely rational policy perspective' but added: ‘This clearly isn't going to play well in other parts of the country, say areas like Wigan or Bolton, which will feel justified in spitting feathers at what they will perceive to be southern bias.'