Damp, mould and condensation has been caused in Welsh social housing by inappropriate cavity wall insulation, a report has found.
More than 280 homes have had insulation removed in Rhondda Cynon Taff alone, while 900 properties require remedial action in Neath Port Talbot.
The problems have been revealed in a draft report for the Welsh government, seen by BBC Wales.
The Welsh government said it could not comment.
The report, by the Building Research Establishment (BRE), was commissioned by the Wales Low and Zero Carbon Hub, which advises the Welsh government.
It was obtained under a Freedom of Information request by campaign group Cavity Insulation Victims Alliance.
Pauline Saunders, from Newport, who founded the action group, called it a "huge problem".
Removing cavity wall insulation (CWI) can cost thousands of pounds, up to five times the cost of its original installation.
Richard Evans of RCT Homes, which owns 10,000 properties, said some insulation companies have approached tenants in Rhondda Cynon Taff directly on the doorstep.
"Over our ten year plan, we've made an allowance of £1.2m to deal with this issue," he added.
Swansea council and housing association Cartrefi Cymunedol Gwynedd based in Bangor both told BBC Wales they no longer install CWI after experiencing problems.
Newport City Homes have had more than 250 cases to deal with and Carmarthenshire council more than 100.
But Cardiff council said they have not had any problems and neither has one of Wales' biggest housing associations, Wales and West Housing.
Plaid Cymru MP for Arfon, Hywel Williams, said he has raised the issue with the Department of Energy and Climate Change in Westminster following complaints from his constituents.
"This stuff has been put into houses where the outside rendering is cracked, so once water gets in the insulation acts as a bridge letting water into the house," said Mr Williams.
"People have been told 'this is a government scheme, it's free' when clearly it isn't," he added.
The MP will be meeting representatives from the UK government on 1 September, along with Ms Saunders.
Both the Welsh government and the Wales Low and Zero Carbon Hub said they could not comment until the report has been finalised.