Sub prime lenders are using house repossession as a measure of first resort, alarming a Treasury committee which wants regulators to get a grip on the problem and crack down on the practice.

John McFall, chairman of the committee, said it was important to ensure that lenders are complying with the rules to 'only use repossession as a last resort'.

'Losing the family home is one of the most distressing experiences a family can go through. We have heard harrowing tales of households struggling to keep their heads above water in an attempt to avoid repossession,' he said.

'The committee was extremely concerned by evidence that many sub prime, specialist and second charge lenders are using repossession not as a tool of last resort, but instead of first resort.'

The committee noted that mortgage arrears and repossession levels were rising and will continue to rise as a result of the recession.

Read the Committee's statement:Treasury Committee urges FSA to take robust stance on unfair arrears charges