The Government's Right to Buy scheme is under threat unless councils are given more funds to replace homes sold under the programme, a report warns.

The Local Government Association (LGA) said more than 60,000 houses have been sold under the scheme in the past six years, with average prices of half the market rate, leaving local authorities with enough money to build or buy just 14,000 homes to replace them.

Research for the LGA showed that two thirds of councils in England will have no chance of replacing the same number of homes sold off under Right to Buy in five years' time without "significant" restructuring of the scheme.

Around 12,224 houses were sold under the scheme last year, but the study showed that by 2023, councils would only be able to replace 2,000 of them.

Rules including a significant portion of all receipts being handed over to the Treasury rather than the communities in which the homes are sold are hampering the ability of local authorities to reinvest in housing, said the LGA.

Blackburn with Darwen Council regeneration boss, Cllr Phil Riley, said Right to Buy was not the biggest obstacle to falling council housing stock.

He said: "My view is that if the Government was really serious about hitting its housing targets, it should remove the powers preventing councils from building council houses."

Martin Tett, the LGA's housing spokesman, said: "We know that the right to buy changes lives - it helps people who otherwise wouldn't be able to get on the ladder experience the security and independence of home ownership. It is essential that it continues to do so.

"However, we are now in a situation where without fundamental reform of the way the scheme is funded, this vital stepping stone into home ownership is under threat.

"Councils urgently need funding to support the replacement of homes sold off under the scheme, or there's a real chance they could be all but eliminated. Without a pipeline of new homes, future generations cannot benefit from the scheme.

"Enabling all councils to borrow to build and to keep 100 per cent of their Right to Buy receipts will be critical to delivering a renaissance in house building by councils."

A Communities and Local Government department spokesman said: "This Government remains committed to helping people get a foot on the housing ladder through the Right to Buy scheme.

"We will be consulting local authorities in the coming months on ways to increase their flexibility to replace homes sold, and will announce further details in due course.