London could be facing a spike in homelessness in the coming months due to the cost-of-living crisis and increases in private rents, boroughs have warned.

Analysis from the cross-party group London Councils has found that less than 10 per cent of properties listed for private rent in the capital are affordable to Londoners who depend on welfare support for meeting their housing costs.

It estimates 125,000 low-income households in the capital are at heightened risk of homelessness because their benefit entitlement now falls short of meeting their rent.

Amid fears that skyrocketing inflation and energy bills will be the nail in the coffin for some households, the government is being urged to increase Local Housing Allowance (LHA) rates to cover at least 30pc of local market rents.

Households who are eligible for LHA receive it as part of their housing benefit or Universal Credit payment to cover housing costs if they have a private landlord.

The government introduced a four-year freeze on LHA rates from 2016, which severely restricted the pool of properties affordable to those who use it to pay their rent.

It then increased LHA to cover 30pc of local market rates from April 2020, but LHA is now frozen at that rate despite rents increasing since.

The increases are in part due to a significant fall in supply, with 35pc fewer properties listed to rent across London in the first quarter this year than the pre-Covid average.

London Councils’ housing chief, Cllr Darren Rodwell, said: “Without urgent action, we’re worried we’ll see growing numbers of low-income households unable to afford their rent and becoming homeless.

"The consequence for those Londoners could be devastating."

A government spokesperson said LHA had been increased "significantly and beyond inflation" during the pandemic, and had benefited over one million households by an average of over £600 over the year.

"We’re maintaining that boost, keeping support for private renters above pre-pandemic levels," he added.

“We recognise people are facing pressures with the cost of living which is why we have taken action through our £37bn support package to help households with rising costs, including £1,200 this year for the most vulnerable helping them to pay their bills and stay in their homes."