Bolton Council should lobby Whitehall about its shock decision to reject radical plans to tackle the town's housing crisis, says a leading councillor.

The Government has thrown out the council's bid to set up a separate housing organisation and borrow millions of pounds from the private sector to spend on 22,000 rundown homes. It means that years of careful planning have gone through the window. The scheme had all-party and tenants' support.

Director of Housing George Caswell says the Government is unlikely to change its mind but deputy Tory leader John Walsh wants an all-party delegation sent to London.

He says the Government has failed to understand Bolton's housing crisis and must be made to see the seriousness of the situation.

"It leaves Bolton's housing department in chaos and Labour's budget in disarray," Cllr Walsh said. "The tenants and taxpayers of Bolton will suffer."

After decades of under-funding, Bolton Council housing service, still one of the best in the country, has run up a backlog of repairs of £160 million. It needs to spend at least £800 million but gets a grant of just £11 million a year.

The council wanted to establish a separate organisation to take control of its housing stock -- known as the Community Regeneration Company (CRC).

The radical plans would have meant hundreds of millions of pounds borrowed from the private sector being pumped into upgrading the town's 22,000 rundown council homes during a 35-year lease period.