Insurers are refusing to extend a crucial agreement with the Government which enables them to continue to cover homeowners who live in more than two million properties at risk of flooding.
The industry's Statement of Principles, which began in 2000, comes to an end next June, when insurers will be free to refuse cover to those properties they deem to be a flood risk.
"As it stands this deal is not being renewed nor will the June deadline be extended," said a spokesman for the Association of British Insurers. Insiders say the industry thought it had a deal with Environment Secretary Caroline Spelman which would have seen a new Statement of Principles put in place if flood defence work was stepped up. However, the Treasury is believed to be blocking the plans due to the cost.