Nearly 60,000 acres of agricultural land, enough to build up to 700,000 homes, lies within 16 miles of Trafalgar Square and could be built on to reduce the housing shortage in the South-East, according to a report published today.

At present this land supports a total of 25,000 farm animals and some arable crops. Some 11 per cent of it is set-aside, producing nothing at all, according to the research, which is based on Government figures. At the Government's density guideline of 12 homes to the acre, 700,000 homes could, in theory, be built on the land.

The research is contained in a pamphlet for the think-tank, Politeia, which argues that it would be better to build the houses that are needed in London and the South-East where people want them, rather than in "growth areas" up to 70 miles from London, as planned by John Prescott, the deputy prime minister.

Mr Prescott recently announced plans to allow the building of 200,000 extra new homes over the next 15 years - above what is already provided for by local plans - in Milton Keynes, Ashford, the M11 corridor and the Thames Gateway. However, he has yet to explain how the extra infrastructure of roads, schools and hospitals will be provided.

The authors of the pamphlet, Building More Homes, Richard Ehrman, a leader writer on The Telegraph, and Crispin Kelly, president of the Architectural Association, conclude that the housing shortage in the South-East is unlikely to be solved by Mr Prescott's proposed re-weighting of the planning system to give more power to Whitehall.