Amsterdam is changing. Along the notorious narrow streets of the red light district, the girls still stand barely dressed in their red-lit windows. But every few houses, there will be a normal shopfront selling nothing more racy than jewellery and jeans. The red neon lights are switching off, not because of a police crackdown or a re-criminalisation of prostitution, but because of a deliberate shift in housing policy.

"It is a clever way of altering the landscape," one Amsterdam resident told us. "Not forcing the whorehouses to close, but offering to buy them out." While in Britain only one in five (18 per cent) of households rent their home from councils, housing associations and cooperatives, around a third of homes in Holland are owned by housing associations - and in Amsterdam that rises to every other household.

One of the key policies being followed by the associations is to mix up neighbourhoods, bringing private buyers into poorer areas and people who need social assistance into richer ones. That extends to the red light district too, where prostitutes now find themselves living cheek-by-jowl with loft-dwelling young professionals and neighbours with something other than sex to sell.

With the rate of repossessions expected to hit 45,000 in the UK this year, up from 26,200 in 2007, housing campaigners are now looking urgently to Holland for inspiration on how to create a system of effective social housing for a new generation.

In 1979, 42 per cent of the British population lived in council housing, but more than two million homes were sold off during the Right to Buy scheme introduced by Margaret Thatcher. These homes were, for the main part, never replaced, meaning the amount of social housing in Britain has been dwindling ever since. In contrast, the Dutch have vehemently opposed such ideas, and steadily increased the housing stock available to vulnerable people.

"The fundamental problem in the UK is the desperate lack of social housing, especially at this time of plunging house prices and the rising tide of repossessions," explains Shelter chief executive Adam Sampson. "Prime Minister Gordon Brown has promised to build tens of thousands of social homes over the next three years and beyond. He must now turn these words and promises into homes.

Holland has proved itself to be one of the leading countries in maintaining its social housing stock, and also not allowing social housing to be stigmatised as bad or only for the poorest in society. "The UK Government should look to some of the models the Dutch are using as a way of creating strong, healthy mixed communities and ensure there is no return to the concrete jungles of the past." In Holland, 2.4 million homes are rented from social housing schemes but there is no stigma to this. "In Holland there is no problem with living in social housing," explains Dr Gerard Anderiesen, director of Stadgenoot, one of the city's largest housing associations.

"I myself grew up in housing owned by a housing association and never felt any stigma. For us, it is important there should be decent homes for people with low incomes. But we have a policy to mix in other people, by renting and selling homes to people on higher incomes too."

On a tree-lined street close to Ooster Park, an open space in the east of Amsterdam, children are playing. Above them tall terraced houses rise five floors up, built in the old Dutch style with narrow windows and pulley ropes to winch furniture into the upper floors.

Returning from the shops on an ancient bicycle, is one of the residents of Oosterparkbuurt, a single mother of three who is fighting breast cancer. "I couldn't afford to live here without help, of course not," says Nice Santos, 45, one of Stadgenot's 32,000 tenants in the city. "But this is social housing. The state is looking after me." Ten doors along in the same block, Tamara Verwoerd, 32, is returning from the tennis club on her cargo bike, a status symbol among the Dutch middle class.

"I like living here," she says. "At first I wasn't so sure as it is a very mixed area, but there is more space here than in the inner city and room for our child Teun, who is two and a half, to grow." Tamara is a private tenant who will pay several times what Nice does. "But I think this is how housing should be - a mix of everyone."

As in Britain, Dutch postwar building programmes created vast concrete estates that slowly deteriorated into poverty traps. The housing associations' policy in Holland, has been to bulldoze where necessary and rebuild where possible, lifting the aspirations of thousands of people.

In the 1970s, Bijlmermeer was the most notorious estate in Amsterdam, until recently a vast, hulk of concrete in the south-east of the city. A dumping ground for the wave of immigration that followed the independence of the Dutch colony of Surinam, by the end of the decade it was a n o-go area. Instead of allowing Amsterdam to become like the ghettoised Paris suburbs, the housing associations acted to transform the estate. "Today, Bijlmermeer is a good place to live," says Dr Anderiesen.

"More than 5,000 of 14,000 dwellings have been bulldozed, and there has been great urban renewal with a mix of owneroccupied properties that now include the black middle classes. The place has gone from 30 per cent unoccupied to having long waiting lists."

Not allowing right to buy, means the housing associations keep control over the estates where they own property, with a close eye on the social mix. As in Britain, the Dutch government has been forced to buy banks like Fortis/ABN Amro to save them from collapse, meaning they also are also holding many of the nation's mortgages.

But with a far smaller percentage of the population owning property, and many more options in social housing for vulnerable families the crisis is less severe here. Looking out from the balcony of his fourth floor Stadgenoot housing association apartment out of work actor Standish Devries, 37, smiles. "I think it is good that there is a mix of rich and poor," Standish says. "This is what makes a community."