Millions of people have been condemned to live under "social apartheid" by 30 years of poor housing policies, a damning report on council estates will say this week.

The 107-page report, to be published on Friday, condemns successive governments for pushing poorer people into what it condemns as "social concentration camps" set away from private housing, jobs and shops. Children born on such estates are more likely to end up unemployed, suffer mental health problems and die younger than their counterparts in private housing, says the study by the Fabian Society. Most damningly for the Government, it concludes that pledges by the then Prime Minister Tony Blair to end "no-go areas" and close of the gap between rich and poor have ended in failure.

The report, entitled In the Mix, finds that by concentrating council housing in estates set apart from the wider community, successive governments have produced a situation where living in social housing is not just a sign of poverty but a cause in itself. It is blunt in assessing Britain's housing policy as "nothing short of disastrous".

Download the new Independent Premium app Sharing the full story, not just the headlines

According to the Fabians, children bought up in social housing now have far fewer life chances than half a century ago, because they are concentrated on increasingly ghettoised estates. Those born after 1970 in council homes are twice as likely to suffer from mental health problems than those born in 1946 in public housing, 11 times more likely to be unemployed and not in training or education, and nine times more likely to live in a household where nobody has a job.

The gulf between those left stranded on these estates and rich or even middle-income families is wider now than it was 30 years ago. In England and Wales, the average electoral ward is 16 per cent public housing, but in the poorest wards that figure rises to 70 per cent or more.

By splitting up those living in public and private housing, successive governments have fostered suspicion towards those who live on council estates. Research for the study found that a third of those polled felt people living on council estates had "nothing in common with them", and 60 per cent of those believed that mixed housing would be a bad idea. It concludes that segregated estates have had a devastating effect on social mobility. "There is nothing inevitable about this correlation between housing and disadvantage. It has been caused by political and institutional processes – and such processes can be arrested and altered."

The London Borough of Islington is widely considered the essence and epicentre of New Labour. It also illustrates the national gulf between rich and poor. The Andover estate, one of the biggest in the country, has now become a byword for deprivation, with high rates of unemployment and ongoing problems with drugs and crime. Tina Baillie, 41, first moved to the estate in north Islington when she was 11, and lives there with her three children, Rick, 18, Abbi, four, and Vinny, two. Her boyfriend is in prison and she says she has been out of work for "quite a while" now. Her hopes for her children are simple and informed entirely by the cycle of unemployment on the estate. "What do I hope they do? Work."

Although fiercely defensive of its residents, she blames the estate in large part for her life as it is now. "I wanted to do everything when I was younger: air hostess, modelling, the lot. But what am I doing? Fuck all! I'd move off tomorrow if I could: get a house and be somewhere different. But my kids love it and it's what I've got."

The struggle to get work can often simply be a product of coming from a certain estate: tenants living there become stigmatised, often having trouble finding work simply because of the postcode they live in.

Deborah Murphy is already terrified that her children will get stuck in the cycle of boredom, crime and unemployment that mars so many within. The 49-year-old, unemployed for several years, shares a small flat with her daughter Keshia, 18, and her four-year-old son Casey. "It's hard to make something of yourself here," she says. "I don't want my son to be here when he's 18 or 19 because there's nothing here. It's hard to get a job: if they find out what estate you're from when you apply it's really hard."

Andrea Assanah, 29, has brought up her nine-year-old son Bradley on the Andover estate, but she spent her childhood on a mixed street of houses. "I would have loved that for my son," she said, "but I had to take what I could when this place came along. There is definitely a better sense of community on a street and you feel less cut off."

The Liberal Democrat leader, Nick Clegg, said: "One of the saddest failings of the Labour Government has been its failure to really shift the life chances of Britain's poorest children. The Government has not only allowed social housing to wither on the vine, it has allowed the gap between the richest and the poorest in our country to turn into a chasm. It is a betrayal of everything the Labour Party was supposed to stand for."

The shadow housing minister, Grant Shapps, agrees: "This report lifts the lid on the devastating impact of a failed housing policy that has led to an increasingly ghettoised social divide. This is bad for those directly disadvantaged and for society because it simply wastes lives."

But a spokesman for the Communities and Local Government Department said: "No government has done more to tackle deprivation... This Government brought in major changes to planning policy last April which means councils must ensure a proper mix of housing to meet local needs."