Oxford City Council has welcomed moves by the Government, which could force them to build more three-bedroom properties to tackle a shortage of family homes.

Ministers have become so concerned at the lack of larger flats and houses on the market they are preparing to issue new planning guidance for local authorities.

A statement, due to be published before Christmas, will introduce a duty on councils to place the needs of families at the heart of planning policy.

The Department for Communities and Local Government, the same Whitehall office that will decide whether the city council is granted unitary status, said it would amount to a "new emphasis".

A spokesman said: "The Government recognises there's a need for more family homes, but some councils are still ploughing ahead with one or two-bedroom flats."

Developers often prefer to build smaller flats for single people because they are easy to sell and, since more units can be built on the same site, yield bigger profits.

But ministers believe a shortage of family homes is leading to soaring prices and forcing people with children to stay in places they have outgrown.

The new planning statement, as well as ensuring a proper balance in housing type to suit local need, will also insist that all new developments have a "family feel" to them.

This could mean ensuring a garden, park or play area is nearby.

City council leader John Goddard said: "We shall welcome any guidance from the Government which makes it easier to maintain settled, family communities.

"It has been difficult in Oxford to prevent the sub-division of three-bedroom houses, and we are already carrying out research into how to strike a better balance."

Any council failing to adhere to the policy would risk having its strategic local plan or individual planning decisions overturned.

Andrew Smith, Labour MP for Oxford East, added: "This is something I have been pressing the Government on, arising from the pressures in Oxford, where in many areas we have seen house after house going over to multiple occupation and flats, destroying the residential character of the local community.

"We also need more land set aside for housing outside the present city boundaries, so we can relieve the 'pressure cooker' effect which is driving house prices and rents to ridiculous levels."