The Nationwide consumer confidence index dropped to just 77 during the month, the lowest level since it was first launched in May 2004.

A weakening property market, uncertainty in the financial markets, and concerns about the economy all took their toll on consumer sentiment.

People's confidence in the current economic situation hit a new low of 74, as consumers felt less upbeat about the number of jobs that were available.

Going forward, people's optimism about future economic conditions remained at a low of 79 for the third month running.

Only 14% of people think the economic situation will be better in six months time than it is now, while just 38% of people feel positive about future employment levels.

But despite consumers' more gloomy outlook, the group's spending index increased by three points to stand at 67.

The improvement was driven by a slight rise in the number of people who thought it was a good time to make a major purchase, such as a house or car, with this rising to 14%.

The group said that while the majority of consumers still thought their household income would be the same or higher in six months' time, there were signs that people were beginning to realise it could be lower, with 12% of people expecting a drop compared with just 7% in September last year.

But despite recent reports of falling house prices, consumers are more upbeat about the prospects for the housing market, expecting price rises of 0.4% during the coming six months, compared with predictions of falls of 1.1% in February.