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Labour has ditched a pledge to control surging rents if it wins the next general election – nine months after endorsing the policy.
Lisa Nandy said in September that that she wanted to give local authorities the power to freeze rents, telling party conference: "Doing nothing is not an option."
But speaking at a conference on Wednesday she described the approach as a "sticking plaster" and claimed it would increase homelessness.
"When housebuilding is falling off a cliff and buy to let landlords are leaving the market, rent controls that cut rents for some, will almost certainly leave others homeless," she told the Housing 2023 gathering of industry professionals.
Scrapping the policy represents a major shift in thinking for Labour, which has promised the regulation of rents in all its manifestos since Ed Miliband was leader.
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But following Ms Nandy’s speech a Labour spokesperson said it was unfair to characterise her latest announcement as a U-turn, stating: "A rent freeze has never been Labour party policy."
The change has prompted an outcry from Labour's left, with campaign group Momentum accusing the party leadership of being "allergic to good, popular policy".
But Ms Nandy told the conference on Wednesday: "It might be politically easier to put a sticking plaster on our deep-seated problems, but if it is cowardice that got us here, it is never going to get us out."
Sadiq Khan and Andy Burnham are among senior figures in local government to have called for powers to control rents as prices surge in their cities, with Mr Khan urging the government to sent up a commission to work out a way forward.
England and Wales are unusual around Europe in having no rules about what a landlord can charge or how sharply they can increase rents over time.
The Scottish government in March voted to cap rent increases on sitting tenants at 3 per cent in most circumstances, and continue a ban on evictions. Local authorities can also apply to control rents more generally in so-called "rent pressure areas".
Speaking at the same conference Ms Nandy confirmed Labour was committed to continuing the Right To Buy policy, which hands social tenants a large discount to purchase their home from the council.
The policy has been criticised because at least 40 per cent of flats sold under the scheme end are now in the hands of landlords and rented privately, and because it undermines the financial viability of building social housing.
"The Right to Buy – whose abolition has come to be a totemic issue for many on the left – was originally a Labour policy," Ms Nandy said.
"It was the decision of the Thatcher Government to fail to replace the council housing stock that was sold, pitting the rights of the individual against the rights of the community. For too long we’ve relied on that Thatcherite consensus."
Successive governments have repeatedly pledged to replace homes sold under Right To Buy, but none have been able to do so.
Ms Nandy said she believed there was “no solution to the housing crisis that does not involve a substantial programme of social and affordable housebuilding” and called for a “refreshed model of housebuilding”.
Speaking last September at a Labour Party conference fringe event on the private rented sector Ms Nandy said she was “personally very interested and attracted by the idea” of freezing rents.
“Local mayors and council leaders should be able to make decisions to freeze rent increases in their local areas over the winter," she told the event at the time.
"And I’ve asked my team to look at that to see if we can work that up into a workable proposal. I think doing nothing is not an option."
Reacting to the latest policy announcement, a spokesperson for left-wing campaign group Momentum said: "Millions of renters and mortgage holders are struggling to make ends meet. With the Tory Government shrugging its shoulders, Labour has both the opportunity and the obligation to set out the decisive action needed.
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"It beggars belief, then, that Lisa Nandy has criticised calls for rent controls, which she herself backed just months ago, and mortgage relief.
"Once again, policies supported by unions, Labour members and progressive Labour Mayors like Sadiq Khan and Andy Burnham are rejected by a UK Labour Leadership which seems allergic to good, popular policy."
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