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In February 2003 the Deputy Prime Minister, John Prescott, launched his action plan for Sustainable Communities. 22 billion was made available "to tackle deprivation and shortage of affordable housing by delivering sustainable communities for all". During the past two decades there has been a shift from public-sector renting to owner-occupation. With the annual rate of new house building in decline, less than 140,000 houses annually, there has been a tendency to build large houses on low density developments aimed at the middle and upper-end of the market. The plan, in recognition of the growing demand for more affordable housing has allocated 5 billion to support the building of such developments. A key part of the plan is the provision for major growth in the following four areas: Thames Gateway, Milton Keynes/South Midlands, Ashford and London-Stansted-Cambridge. All of these areas are in the southeast of England, where the population density is the highest in the country and the water availability is the lowest. Although the definition of a sustainable community includes "buildings that minimize the use of resources", the environmental consequences of the water used by these additional one million homes were not a major factor in the government's thinking. In 2001 the Environment Agency published its national water resources strategy with a map of England and Wales indicating many river catchments in the south-east of England already experiencing over-abstraction. As water resources are not a material consideration in land-use planning issues, lack of water cannot be used as a reason to limit development: the thinking is that the water can always be brought in from somewhere. Hence the challenge then becomes to make these new homes as water efficient as possible. The paper outlines the government proposal and sets it in the context of available water resources. The Environment Agency has considered a number of policy options to try to ensure that the environmental impact of these new homes on the water environment is limited. These policy options are detailed and for each an assessment is made of what the impact on the water used in the home would be by comparing it to the predicted water use in a standard dwelling. Includes 14 references, tables, figures.