Living in cramped conditions harms children's health
One in five children in London now live in overcrowded homes, with the crisis worsening in the social housing sector, figures from a housing charity showed.
About 331,000 children live in crowded homes in the capital, a rise of 28,000 since 2007, Shelter said.
Urging councils to build more family homes, Shelter said living in cramped conditions had a "devastating effect" on children's health and safety.
Mayor Boris Johnson pledged to halve overcrowding in social housing by 2016.
The housing charity's warning comes as national figures show more than one million under-15s live in overcrowded homes, a rise by 54,000 in two years.
Shelter said the situation was likely to worsen as recent Local Government Association estimates showed waiting lists for social housing would touch two million by 2011.
In London the under-15 overcrowding ratio has worsened in the social housing sector, with one in three children forced to live in small spaces.
Living in cramped conditions has a "devastating effect on family life" and those children are up to 10 times more likely to contract meningitis than others, Shelter said.
Sam Younger, Shelter's chief executive, said: "For too long the issue of children living in overcrowded housing has been a hidden problem.
"There is no doubt that overcrowding has a massive impact on children's health, safety and future prospects and can cause depression for parents struggling to cope in cramped conditions.
"London boroughs must work with the GLA, government and agencies like Shelter to tackle overcrowding by ensuring enough affordable family-sized homes are built."
The charity highlighted the case of Jacqueline Pennant who lives in a two-bedroom house in Wandsworth, south London, with her three children.
Her youngest suffers from chronic asthma.
Her daughter sleeps in her bed and her younger son sleeps on a make-shift bed on the floor of her bedroom.
Earlier this year outlining the housing plan for London the mayor promised to halve overcrowding in social housing said boroughs were working to deliver 50,000 new affordable homes by 2011.