Repossessions rose 12 per cent in the third quarter of 2008, while the number of homes falling three months behind on their mortgages rose by 8.2 per cent.
Data from the Council of Mortgage Lenders show in the three months to the end of September 1.44 per cent of mortgages or 168,000 homes - were at least three months in arrears.
The CML now predicts the level of homeowners falling into arrears will top 170,000 by the end of the year ahead of earlier predictions.
Some 54,100 mortgages are six to 12 months in arrears and 20,200 were over 12 months behind on their mortgages.
A total of 11,300 homes were repossessed over the three months and a total of 45,000 repossessions are now predicted for 2008.
CML director general Michael Coogan said: "The CML and lenders are absolutely committed to ensuring that repossession is only ever a last resort.
"Most borrowers who face payment problems successfully keep their home by working with their lender - anyone worried about mortgage payments should contact their lender at the earliest opportunity, before arrears start to build up."
He went on to call on the government to do more to support vulnerable households through the economic storm.
"Next week's pre-Budget report should concentrate on making much more assistance with mortgage payments available for people whose income is reduced, as help is currently far too limited."
The CML figures also show buy-to-let has been battered over the third quarter of the year.
Falling rents and an oversupply of properties on the market saw landlords unable to cover their mortgages while finding a new buy-to-let remortgage has become tough.
A total of 1.58 per cent of buy-to-let loans were in arrears a rise of 28.6 per cent.
Mr Coogan now predicts the number of families falling behind on their mortgages to increase, but he claimed repossession levels would be contained.
"While lenders cannot change the underlying causes of financial difficulty, such as unemployment, they can make sure that their response to borrowers is constructive and seeks to avoid repossession wherever other solutions can be found," he said.
"That is what lenders are doing, meaning that the number of repossessions is likely to be contained to the levels we forecast at the beginning of the year, despite the worsening in economic and funding conditions through the year."
The advice for anyone facing trouble with their mortgages is to seek help and contact their bank or building society as early as possible.