Plans to create 10 eco-towns could be dramatically scaled down after a catalogue of problems was identified.

Ministers are considering advisers’ findings that most of the proposed locations do not meet the environmental criteria.

There are also serious concerns about the implications of the credit crunch, with the housebuilding industry in crisis and fears about whether there will be a strong enough market for the new homes.

The scheme to build eco-towns – developments of up to 20,000 homes with an overall carbon rating of zero – was announced by Gordon Brown before he became prime minister last year.

Officially, the government is committed to building five by 2016 and “up to 10” by 2020.

However, ministers now say it is the quality, not the number, of developments that is most important, fuelling speculation that the final number of sites could be as few as three.

A report by the government’s advisers on eco-towns declared that most of the 15 shortlisted proposals were “just housing estates in the countryside with a green label attached”.

It concluded that only a few met the requirement to provide good transport links to cities, not to destroy green fields, to use energy from sustainable sources and for all homes to be carbon neutral.

Caroline Flint, the housing minister, will tomorrow announce the next phase of public consultation, including plans for roadshows around the shortlisted sites.

The government wants to press on with the scheme, but the department for communities is determined that only towns with “real eco-credentials” will go ahead.

Yesterday a spokesman for Flint admitted the final number of eco-towns was not fixed and was dependent on the quality of the proposals submitted.

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