A HUGE rise in the number of people in the North-East and North Yorkshire on the brink of losing their homes is proof that the housing bubble has burst, it was claimed yesterday.

mortgage lenders launched 1,508 repossession actions in the region between July and September compared to just 854 in the same period last year - a 76 per cent increase.

The biggest rises was in Tyne and Wear, where the number of "actions entered" soared by 87 per cent, from 333 to 622 in the third quarter of 2005.

But there were also big leaps in the rest of the region, including Cleveland and Darlington (70 per cent) and County Durham (63 per cent), as well as in North Yorkshire (45 per cent).

An "action entered" is the first step in the process for seizing a property, where a lender issues a summons in a county court.

Alarmingly, the number of repossession orders actually made almost doubled in the third quarter in both the North-East (from 223 to 416) and North Yorkshire (from 35 to 67).

The Liberal Democrats seized on the department for constitutional affairs figures as evidence that the economic slowdown meant there were big problems ahead.

Vince Cable, the Lib Dem treasury spokesman, also criticised the absence of a safety net for homeowners who got into difficulties with their mortgage repayments.

Payment protection schemes offered by insurance companies were over-priced and contained too many exemptions, making government action essential.

Mr Cable said: "These figures are deeply worrying. At long last, the Chancellor has accepted there is a bubble in the housing market.

"Now he needs to recognise that, for many homeowners, it is sadly bursting and that he needs to take action."

Across the country, the number of repossession actions initiated jumped by 54 per cent to 29,991, the highest level since 1996.

Experts blamed the big rise on the expiry of cheap fixed-rate mortgages this year, which had caused some borrowers' monthly bills to rise sharply.

Homeowners have also been squeezed by the series of interest rate rises that preceded the small cut to 4.5 per cent in August.

The Council of Mortgage Lenders predicted that repossessions and mortgage arrears were likely to increase further over the next two years.

Experts say repossessions may be rising, but point out they still remain well below the rates seen when the housing market crashed in the early 1990s.

Nevertheless, any rise in repossessions is embarrassing for Tony Blair, who has boasted that Labour has ended the "boom and bust" of the Tory years.