COUNCIL tenants should be forced to move out if their children leave home or they end up living alone, a Government-commissioned report suggested yesterday.

Under recommendations to ministers, they could also be asked to pay more rent or buy a stake in the value of the property if their income rises.

The proposals would end the automatic right to a council or housing association home for life by giving tenants means-tested reviews every one to five years.

It would affect tens of thousands of people in the North-East and North Yorkshire, where there are more than 180,000 council homes, as well as nearly 140,000 properties run by social landlords.

The report was commissioned by Communities Secretary Ruth Kelly to explore ways of breaking up so-called sink estates, which have increasingly become concentrations of poverty.

Ms Kelly, alarmed by evidence that working-age people in social housing are twice as likely to be unemployed, is determined to create a better social mix.

But the key proposal was immediately condemned by the Liberal Democrats, who blamed the crisis in social housing on the Government's failure to build enough council homes.

Dan Rogerson, the party's housing spokesman, said: "Forcing people out of their homes won't solve the crisis in social housing, but it will divide neighbourhoods.

"Determining rent by means-testing will either deter people from working or push them off estates where they are happy and established. Meanwhile, the poorest and most deprived will be left behind." Adam Sampson, chief executive of housing charity Shelter, said: "Tenants will be extremely worried by plans to hold regular reviews."

Nearly all the region's authorities have either a large number of council houses or properties that have been sold to registered social landlords, such as housing associations.

The largest stock is in Newcastle (37,624), followed by Sunderland (35,070), Gates-head (26,867), South Tyneside (23,151), Middlesbrough (15,959) and Stockton (14,700).

The report, by Professor John Hills, of the London School of Economics, accepted that the proposal for fixed-term tenancies could "sound outlandish" to many.

However, the report argued the move would free homes for those most in need. It said: "The ability to move 'empty nest' couples or single people might be a way of reducing overcrowding."

A spokesman for Ms Kelly's department immediately sought to calm fears of an end to secure council tenancies, saying: "We have got no plans to change existing tenancy rights."

The report also suggested councils and housing associations should provide homes in areas with higher earners - and use spare land on council estates to build private homes.

Selling properties to higher income groups, or letting them at market rents as they become vacant, would create more economically mixed areas.

Prof Hill concluded there had been important progress in the standard of social housing after a multi-million- pound Government spending programme.

But he said: "There is disappointing evidence on tenant satisfaction, space standards, and neighbourhood conditions."

Last night, John McDonnell, who is bidding to replace Tony Blair as Labour leader, said: ''We are still missing the central point.

''Homelessness has increased over the past ten years on a catastrophic scale and can only be tackled by a major council house building programme that deals with homelessness, overcrowding and depravation.

''The Government must drop its ideological bias against council housing."