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People priced out of the housing market by second-home owners are having to live with parents or "sofa-surf", a council cabinet meeting has been told.

A councillor said up to 7,000 homes in Gwynedd were owned by people who do not usually reside in Wales.

Councillors want the Welsh Government to intervene to stop people registering their homes as business properties to avoid paying a 50% council tax premium.

The Welsh Government said councils were best placed to address the issue.

Council officers in Gwynedd believe the issue is costing the cash-strapped council £2m a year in potential revenue.

About 10% of Gwynedd's housing stock is currently used as second homes, more than any other county in Wales, the Local Democracy Reporting Service (LDRS) reports.

"To describe the current situation as a crisis would be an understatement," said Councillor Craig ab Iago, the member responsible for housing as he addressed a virtual meeting of the cabinet.

Councillor Dafydd Meurig added: "We have people living with their parents and 'sofa-surfing', which is a situation we can't put up with for much longer."

Chief executive Dilwyn Williams said ministers in Cardiff Bay need to to amend the local government finance act to prevent domestic dwellings from transferring into business properties.

"As a council we have tried take positive action in terms of raising a premium on second homes, but our problem is that people have found ways of avoiding paying it," he said.

"Unless we're able to shut that door we won't be able raise the necessary receipts to do something about the supply side, and I know this is something we're chasing the Welsh Government on."

A Welsh Government spokesman said there was "specific letting criteria which owners must meet for their property to be treated as self-catering accommodation".

"Local authorities are best placed to address this issue and that is why we have given them the discretionary power to charge premiums to up to 100% on the council tax of long-term empty and second homes in their area," he added.