The so-called "nutrient neutrality" rules have been criticised by developers and some Tory MPs for blocking much-needed housebuilding.

The government hopes the move, which is coming in an amendment to the Levelling Up and Regeneration Bill, will allow 100,000 new homes to be built over the next few years to 2030.

Secretary of State for Levelling Up, Housing and Communities, Michael Gove MP said: "We are committed to building the homes this country needs and to enhancing our environment.

"The way EU rules have been applied has held us back."

The government will work closely with environmental agencies and councils on the changes, which should bring a "multi-billion pound boost for the UK economy", he said.

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The rules, introduced in 2017 when the UK was still an EU member, are designed to ensure a development does not leak nutrients into local wetlands and waterways in protected areas.

They oblige developers to show they will prevent or offset that pollution in order to win planning permission.

But the property industry will now be freed from that obligation, with the cost shifted to the taxpayer instead.

The "very small amount" of pollution from new homes will instead be offset by Natural England, with the government doubling existing investment for the Nutrient Mitigation Scheme to £280m by 2030.

The housing industry has welcomed the move as a way to speed up the building of new homes.

Stewart Baseley, executive chairman of the Home Builders Federation said house builders are "keen to play a part in protecting rivers", but the current rules are not solving the issue, rather "exacerbating another national crisis, our shortage of homes".

But the major shift is likely to anger environmentalists, who have recently ramped up campaigns against sewage spills and other pollution leaching into Britain's rivers and seas.

Water pollution rules are not the only issue affecting housing supply, with some calling for increased public sector investment, more land available to be made available and streamlining of the planning process.

Liberal Democrat environment spokesperson Tim Farron MP said: "Not content with the levels of pollution in our rivers already, scrapping nutrient neutrality is a disgraceful act from the government."

He added: "If ministers actually cared about our rivers they would clean them up rather than scrapping the few rules in place that protect them."

Green Party co-leader, Adrian Ramsay said the country needs "stronger rather than weaker regulations on private water companies and hugely profitable housebuilders".

The Conservative government has pledged to build 300,000 new homes every year by the mid-2020s.

Parliamentary figures show housing supply has increased year-on-year from a low point of 125,000 in 2012/13, reaching a high point of 243,000 new homes in 2019/20. Supply dipped during the COVID pandemic but rose again after that.