Council tenants snapping up cut-price homes under the right-to-buy scheme cost Brighton and Hove more than £2 million last year.

Brighton and Hove City Council pocketed £3.4 million from the sale of 124 council homes last financial year, £2.2 million less than the market value of £5.6 million.

Housing campaigners have pointed to the missing millions as a reason for the Government to scrap tenants' right to buy or allow councils to charge market prices.

The average sale price was £27,420. According to the Housing Corporation, the average replacement cost would be £140,000.

Prospective city councillor Bill Randall, housing spokesman for the city's Green Party, said: "It's social and economic madness."

More than 4,000 homes in Brighton and Hove have been sold at a discount since right-to-buy was introduced in the Eighties.

Now there are only 13,000 council homes left, while 5,000 people are on the waiting list for houses.

The Argus revealed last month how companies were offering tenants £10,000 to exploit a loophole that enables them to buy properties in tenants' names, earning the right-to-buy discount and selling them at a profit.

Many fear those accepting such offers would quickly find themselves homeless and out of pocket.

Deputy Prime Minister John Prescott has mooted the idea of restricting discount sales of council homes in the South-East. Firm proposals are expected by the end of the year.

Labour councillors Pat Murphy and Jack Hazelgrove have written to housing minister Lord Rooker with their concerns about abuse of the right-to-buy system.

Coun Murphy, deputy chairman of the council's housing management committee, said: "There is a huge gap between what the properties are worth and what they are being sold for, which is scandalous. That is money we could arguably use to improve our own stock.

"We're losing properties to the private sector we can never get back, while we have waiting lists filled with people in desperate need of accommodation."

He wants the Government to bar companies from buying council homes for profitable sub-letting, and give councils compulsory purchase powers for empty homes in the private sector.

But Mr Randall, standing for Hanover and Elmgrove ward in the next elections, believes tougher action is needed to end the loss of council homes.

He said: "Local people have been priced out of the market.

"Homelessness and the use of bed-and-breakfast accommodation are at record levels, yet the Government does nothing."