The report by the National Housing Federation finds that 8.5 million people in England are facing some form of housing need.
Overcrowding is the biggest issue, affecting nearly 3.7 million people.
One in three are children, for whom living in cramped households and sharing rooms and beds with relatives can cause depression and anxiety and harm education and family life.
Overcrowding has risen 13% in the past three years due to Government underfunding for social rent and a shortage of family-sized social homes, the report states.
There are one million children whose families cannot afford their rent or mortgage payments, with many private renters being squeezed by high rents and soaring energy, food and living costs.
Some households cannot even afford the cheapest social housing due to benefit cuts.
The study also found that around 293,000 children’s homes are unsuitable for their needs or health requirements, for example lacking outside space.
Another 283,000 children are effectively homeless, living in other people’s houses as their families cannot afford accommodation of their own.
The number of homeless children living in temporary accommodation – 124,000 – has risen by over 80% in the past decade, according to the research.
In addition, over 209,000 children live in homes that are in poor condition.
The number of children affected by housing problems was analysed in the National Housing Federation’s annual report for the first time this year.
The research, carried out by Heriot Watt University, found that 4.2 million people in England are in need of social housing.
Nearly a third of those are children, who only account for a fifth of the country’s population – highlighting the fact that children are disproportionately affected by the scarcity of social housing.
Kate Henderson, chief executive of the National Housing Federation, said: “Today’s report shows that our children are fast becoming the biggest victims of a broken housing market.
“It is nothing short of tragic that so many children are forced to live in cramped conditions, sharing bedrooms and sometimes beds with parents and siblings whilst their families struggle to cover the costs of their food, clothes and shelter.
“Amongst those families affected will be many of the key workers that keep our economy going such as teachers, nurses and labourers.
“By not providing the homes these families can afford to live in, we are depriving millions of children of a decent chance in life.
“Every child deserves to live in a safe, secure and affordable home which is why we’re calling on the Government to prioritise sustained and long-term investment in social housing.”
The National Housing Federation, the voice of 700 housing associations, says that the Government’s Affordable Homes Programme, which commits £11.5 billion to build 180,000 new affordable homes over the period 2021-26, is not enough.
Lori, 30, who lives with her six-year-old daughter and 22-month-old son in a small room in a hostel in Cambridgeshire said: “I’m running on empty and just want to find a safe place to call home.”
Although the family live in overcrowded conditions and share a bathroom with a stranger, the mother said the hostel was “better than where we were before”.
Until recently, they lived in private-rental home, to which they were referred by the council due to a lack of social housing.
It was deemed extremely unsafe by environmental health due to electrics that were a fire hazard.
Lori said: “Every day I feared for my children’s lives. I had to stay in the same room as them and I barely got any sleep as I was constantly worried about their safety.”
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