A minister accidentally revealed the Government's secret fears about British house prices today when she unwittingly flashed private documents at photographers.

Housing Minister Caroline Flint's notes, exposed as she walked into Downing Street, warned prices would "at best" fall by five to 10 per cent this year.

She also briefed Cabinet colleagues that housebuilding was "stalling", starkly adding that "We can't know how bad it will get".

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The embarrassing gaffe came as figures showed inflation has now hit three per cent and mortgage lending is at its lowest rate for 30 years.

As well as undermining Government attempts to talk up the economy, there were also fears Ms Flint's slip-up could undermine confidence in the market still further.

It also overshadowed a major announcement by the Chancellor aimed at heading off the 10p tax row by announcing compensation plans.

Ms Flint beamed at photographers as she carelessly exposed the bleak assessment when she strolled into Number 10 for the weekly Cabinet session.

The typed document, headed "Caroline Flint - speaking notes", had a sticker attached which said "Papers for Cabinet meeting 13 May 2008".

It pointed out leading house price indicators were predicting reductions in prices for the first time in recent years.

"Given present trends, they will clearly show sizeable falls in prices later this year - at best down five per cent - 10 per cent year on year," it said.

On construction, she wrote: "Housebuilding is stalling. New starts are already down 10 per cent compared to a year ago. Housebuilders are predicting further falls.

"Having seen net additions reach roughly 200,000 in each of the last two years, the figure for 2008-9 is almost certain to be well down on that."

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