The head of Britain's Environment Agency, has said that homes which are built on flood plains against official advice should be refused insurance, in a bid to stamp out the threat of millions more flats and houses being erected in high-risk areas.

The serious risk of flooding to homes and businesses across Britain - which is rising significantly - was dramatically highlighted this summer, when torrential rain resulted in up to 14 deaths and damage to the tune of £3 billion.

In the aftermath of the disaster, the Observer revealed an Environment Agency investigation had found 5,000 sites of "critical infrastructure" were at risk of flooding.

In another agency report, which is due to be published this week, experts warn that they are "currently unable to provide meaningful warnings for imminent surface water or sewer flooding", which was the problem that caused a large proportion of the damage across the country this summer.

With weather forecasters predicting that we are about to see an increase in river, sea and drainage flooding as a result of global climate change, Baroness Young, the chief executive of the Environment Agency, has called on the insurance industry to refuse to insure new properties where planners have given the go-ahead against the agency's advice.

It seems fair enough most people may say. If the Environment Agency has specifically warned that certain areas are at a much higher risk of flooding and new property builds are given the green-light despite this warning, insurers should not have to bear the financial brunt of this.

Yes, that is logical enough but the fact is, homes still need to be built and those who own houses in these high-risk areas still deserve to have an insurance safety net, like the rest of the population. Natural disasters are unplanned and are nobody's fault, so people living on flood plains still deserve the right to insurance.

We are all getting deeper in a worsening housing market crisis, with increasing property prices, higher mortgage payments and less affordable housing.

The government has already warned today that house-building targets for England must be increased or a whole generation may be unable to get a foot on the property ladder.

The housing minister, Yvette Cooper, announced extra incentives for councils which created millions of new affordable homes but more is still needed. A new report has said that by 2016 an extra 250,000 homes would be needed beyond current targets.

In the mean time, while people wait for the government to build all those 250,000 homes, they still need affordable houses to live in. If flood plains offer cheap means to cope with the housing demand, which is threatening to exercebate the current housing situation, then it has to be done.

Unless the government takes on its responsibility to provide affordable housing for those who can't find it elsewhere, those who can only afford to live on houses built on flood plains should not be punished by witholding insurance cover.

According to official statistics, there is a 35,000-house gap between existing annual construction levels of 185,000 new houses and the 220,000 new households that will be formed every year.

Stephen Nickell, chairman of the National Housing and Planning Advice Unit, said: "If we fail to act, then a generation of buyers will be unable to get a foothold on the housing ladder, not just in London but across large swaths of England, and current home-owners will not be able to move on to bigger and better homes."