The service provided by the organisation which manages council housing has worsened, according to a government watchdog.

The Audit Commission has handed Ascham Homes one star for its “fair” service to tenants, following an inspection earlier this year.

The arms length management organisation, which was set up to bring all council housing up to a basic standard of decency, was previously awarded two stars.

But the council was forced to bail out the organisation to the tune of £5 million after it failed in a legal bid to overturn a ruling preventing it charging leaseholders for work on blocks shared with tenants.

The Audit Commission said Ascham Homes has suffered from weak financial management and warned high operating costs were not resulting in an improved service.

Tenant satisfaction was assessed as low, despite improvements in recent years, and the organisation’s relationship with the council was deemed weak.

The organisation’s response to anti-social behaviour, domestic violence and harassment was described was also described as weak, as was service planning.

However, Ascham Homes was praised for being easily accessible and providing some good services for vulnerable people.

A high proportion of repairs were assessed as being carried out within target timescales.

The Audit Commission says that Ascham Homes, which has recently appointed Madeleine Forster as chief executive, is aware of its weaknesses and has plans in place to improve.

It is not yet clear how the new assessment score will effect future Ascham Homes funding.

In a joint statement, Ascham Homes and Waltham Forest Council said: "Waltham Forest Council and Ascham Homes jointly agree that the Audit Commission report represents a fair assessment of the services provided at the time of the Inspection, and welcome the positive comments about service improvements that have been made recently.

"For example, regarding the gas servicing, the significant increase in the repairs budget and rents and estate services.

"We are of course, disappointed with the overall result, and acknowledge that there is further work to be done to improve our services to customers and achieve the overall quality and standard that our residents deserve."