The government has not ruled out more development on flood plains, as it unveils plans for 3m new homes by 2020.
Homes on flood plains are at greater risk in heavy rains
Housing Minister Yvette Cooper told MPs new guidance would require councils "to plan more widely for the consequences of climate change," including flooding.
The Housing Green Paper says councils should get Environment Agency advice on the flood risk of new developments.
The Tories say plans will put more homes at risk, as floods swamp parts of Gloucestershire and Worcestershire.
Ms Cooper told MPs that no new building should take place in areas with severe flood risks, although the green paper is less definitive, saying it should be avoided "if better alternatives can be found in the same area".
She had earlier said some new homes would be built on flood plains, subject to appropriate flood defences.
But she told MPs that ministers had "progressively strengthened" planning rules to protect homes from flooding and councils were now required to consult the Environment Agency on developments.
She said that where councils did not heed Environment Agency advice on housing plans, the government was "prepared to take over those decisions ourselves".
In a Commons statement she unveiled the government's plans to see 3 million homes built by 2020.
By 2010-11 more than 70,000 affordable homes a year would be built, of which 45,000 would be social homes and the rest shared ownership.
But she rejected a "return to the old council estates", pledging instead "mixed communities".
She invited bids for five new "eco towns" and said, from 2016, all new homes would have to be "zero carbon".
Ms Cooper said it was unfair that so many first-time buyers had to rely on financial help from family and friends - saying housing could become "one of the greatest sources of social inequality" in the future.
She said 2 million of the 3 million new homes would be built by 2016, but she said there must be no return to the mistakes of the 1960s, when "quality was sacrificed in the name of speed".
Strict protection for the Green Belt would not be changed but there would be work across government to find more brownfield sites.
Parts of Worcestershire were badly hit by flooding
For the Liberal Democrats, Paul Holmes asked why Britain had to wait until 2016 to make all new homes zero-carbon rated, when 2011 was "perfectly achievable" and it had "already been achieved in Germany".
He also said more powers to decide where to build new homes should be given to local councils, saying the Green Paper represented "one more imposition of yet more central control".
Earlier Ms Cooper said the government would continue to build houses on flood plains as long as the "proper defences" are in place and said house building critics were "playing politics" with floods.
But shadow communities and local government secretary Eric Pickles said: "Gordon Brown has to accept the inconvenient truth that if you build houses on flood plains it increases the likelihood that people will be flooded."
And shadow housing minister Grant Shapps warned building would take place in areas of high flood risk.
"We can expect more flash floods of the type we have experienced in recent days and weeks," he said.
Nick Starling of the Association of British Insurers said new homes "should not be built in high-risk areas of the flood plain".
"They must be planned and designed with flooding in mind, with greater use of flood-resilient building materials," he said.
The National Housing Federation, which represents housing associations in England, said the £8bn investment outlined might not be enough to fund the 70,000 new social homes a year that are needed.
But chief executive David Orr said: "Ministers should be applauded for recognising that there's simply no way we could tell the thousands of key workers and low income families, desperate for a decent home, that we can't build any more new homes because of concerns about flood plains. After all, much of the country is a flood plain."
But he said flood defences and drainage would need substantial improvement and the Environment Agency should be able to veto high-risk developments.