A group of building contractors is taking Oxford City Council to the High Court after it increased the proportion of social housing that must be included in new estates.

J.A. Pye (Oxford) Ltd, of Langford Locks, Kidlington, Bellway Homes Ltd, of Seaton Burn, Newcastle-upon-Tyne, and the London-based House Builders' Federation, are challenging the council's decision to adopt new social housing guidance.

The change increased the proportion of cheap housing builders must include in new developments in Oxford from 20 per cent to 30 per cent.

The case could have far reaching implications for local authorities and developers throughout the country.

The contractors said the new guidance had drastically increased the affordable social housing burden on them, and was unfair.

The 1997 Oxford Local Plan set the amount of social housing in new developments at 20 per cent, but in April city councillors agreed to increase that to 30 per cent.

David Holgate, representing the builders, told the court: "The change of policy is of considerable importance to house builders because social housing inevitably involves the provision of a substantial subsidy from the developer.

"The greater the proportion, the greater the economic burden on the developer."

He claimed that the change from a 20 per cent level, which was set after a planning inspector had conducted a public inquiry, to a 30 per cent level which was not scrutinised in the same way, was unfair to his clients.

The builders are asking Mr Justice Ouseley to quash the decision and order the council to look at it again.

The hearing, expected to last two days, continues.