Children in rented accommodation in the capital do not fare much better.
A quarter live in overcrowded homes, according to the Crowded House report, which identifies London as one of the worst-hit areas in the UK.
More than 900,000 children in England live in overcrowded homes, prompting calls for greater investment in affordable, family-sized accommodation.
Shelter director Adam Sampson said children's health, education and wellbeing were being damaged, and a lack of space and privacy was destroying their relationships with parents and siblings.
"Overcrowding has to be tackled to prevent future generations of children being permanently scarred," he said.
The study found single parent and ethnic minority families were more likely to be living in overcrowded conditions.
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