The government is to offer cash rewards of up to £500 to people who report neighbours they suspect are unlawfully subletting their council home.
Ministers have been told that between 50,000 and 200,000 social rented homes in England are occupied by unauthorised tenants, at a time when waiting lists are full and housing projects have stalled.
They are expected to target 8,000 tenancy cheats in a first wave of investigations this week across 145 local authorities after a trawl of council records by the Audit Commission.
There is a growing crisis as demand for social housing has soared during the recession.
About 1.8m households are on waiting lists in England, while just 60,000 social homes have been built in the past two years.
John Healey, the housing minister, said: ‘We can’t allow cheats to hang on to the tenancies of council houses they don’t need and don’t live in.’
The crackdown will be difficult for subletters, who have no rights or protection if a social home is reclaimed, and who can be evicted in as few as seven days.