By Matt Falloon and Sumeet Desai

LONDON (Reuters) - More people in England and Wales are just one step away from losing their homes than at any time since the early 1990s as the credit crunch bites, figures showed on Friday, and experts say things can only get worse.

More evidence of a weakening economy adds to Prime Minister Gordon Brown's woes. Pollsters say support for his Labour Party has fallen to a record low and he now faces losing power to the opposition Conservatives at the next election due by May 2010.

The Bank of England will also be concerned to see more homeowners failing to keep up with mortgage payments. Despite three official interest rate cuts since December, the credit crunch has forced many mortgage lenders to raise their rates.

Court orders for mortgage repossessions rose by 17 percent in the first quarter of 2008 compared with the same period in 2007, hitting 27,530, the Ministry of Justice said.

"Unfortunately the situation seems set to deteriorate significantly further," said Howard Archer, an economist at Global Insight. "Particularly if the economy suffers an extended marked slowdown and unemployment starts rising."

Repossession orders have tripled in five years but remain well below levels seen in the early 1990s recession when many homeowners were plunged into negative equity -- with mortgage debts exceeding property values -- as house prices crashed.

There are now roughly 12 million mortgages in Britain, according to Council of Mortgage Lenders, so only a small fraction of homeowners are failing to keep up with payments.

And only half of repossession orders ever result in people losing their homes as lenders often renegotiate terms. The Royal Institution of Chartered Surveyors forecasts about 43,000 repossessions in 2008, well below the 76,000 peak of 1991.