The report, conducted by the London Research Centre to identify housing needs in the capital, also found that black and Asian children were twice as likely to suffer. Overcrowding affected 150,000 children living in this sector, an increase of 30,000 since 1986-87.
A spokesman for the Commission for Racial Equality said: 'These statistics show that ethnic minorities are under pressure on the housing front.
'We knew that they were over- represented among the homeless and overcrowded and this survey reinforces that.'
The survey, which covers 1992, found that the policy of encouraging council house sales has produced 'a shrinking public housing sector less and less able to meet the needs of families'.
Since 1980, councils in London had sold off one-third of their three- bedroom units and nearly 40 per cent of those with four or more bedrooms through the Government's Right-to-Buy scheme.
'As a result there appears to be no way out of the growing levels of overcrowding for London's children. They are the losers from the housing policies of the 1980s,' the research centre concludes.
The Association of London Authorities, which represents the capital's Labour-controlled councils, said: 'We want to see the Government release the pounds 5bn from past council house sales so that appropriate replacement housing can be provided.'
The centre estimates that about pounds 2.4m needs to be spent on 25,000 additional family homes with three or more bedrooms, in order to deal with the crisis in London.
It says the alternative is that 'children and ethnic minorities will take increasing strain. With the limitations now facing local authorities, it will be a challenge to spread the misery more evenly'.
The report comes amid concern from housing groups about a government Green Paper which proposes that the private sector should play a greater role in helping those in housing need.
London Housing Survey 1992. Social Renters: council and housing association tenants in London. Available from the London Research Centre, 81 Black Prince Road, London SE1 7SZ; pounds 20.Reuse content