OXFORD could invest £5m in a homeless housing scheme pioneered in London to combat a looming crisis in temporary accommodation.

Senior councillors at Oxford City Council will tomorrow be asked to back proposals to join the Real Lettings scheme, which would purchase properties to house people and families with connections to the city.

It comes as the local authority warns its ability to help the "disproportionately large" homeless population is "severely limited" in the face of the chronic housing shortage.

This has been worsened by private landlords shunning tenants who receive housing benefit in favour of higher market rents, the authority said.

There are also fears cuts to welfare announced by the Government could push more families into homelessness.

According to figures from April 2014 to March this year, the local housing allowances provided for two-bedroom properties averaged £834 per month, against a corresponding average rent of £1,091.

Scott Seamons, city council executive board member for housing, said the situation had pushed the city council into looking at alternative measures.

He said: "With rising rents and cuts to in-work benefits it is becoming harder and harder to find property for families who fall into homelessness in Oxford.

"We really don't want a city where those on low or even middle incomes can’t afford to live.

"Investing in a property fund will allow us to house more [homeless] families, saving money in temporary accommodation costs, whilst also representing an investment for the council."