Output fell 6% in May compared to a year earlier while the outlook for the rest of 2012 appears bleak.
More robust figures for the three-month period from March to May showed the drop was even sharper, down 7.4% compared to the same period last year.
New work dropped by nearly 10% with repair and maintenance less heavily hit at 2.4% down.
Over this period, new public housing work is down by 23%.
The only two sectors to record a slight increase in work were new private commercial up 0.2% and non-housing repair and maintenance by 0.5%.
The ONS statistics chime with the most recent recent Markit/CIPS purchasing managers' index (PMI).
The PMI reading indicated that activity in the construction industry in June had fallen at its fastest pace for two and a half years.
It also found employment in the sector fell for the first time in four months.
Noble Francis, Economics Director at the Construction Products Association said: “If government is serious about recovery in UK construction and the economy, it clearly needs to focus on getting a replacement for PFI sorted out immediately, getting work on the ground now by focusing on repair and maintenance and ensuring that the Green Deal becomes a success by giving householders greater incentives to invest in energy-saving improvements.”
Mike Leonard, director of the Modern Masonry Alliance said: “The ONS figures only serve to confirm the rapid decline of the construction sector and the UK based manufacturers who supply them.
“Any hesitation could be catastrophic, the need to create jobs and growth now is irrefutable. Banking on hope is a failed strategy, what we need now is certainty.
“Cutting VAT to 5% for 12 months for all maintenance and home improvements and funding an 18 month program to build 25,000 additional public rented homes is the recipe for growth and jobs.
“Right now we have the manufacturing capacity, Labour, land and demand. Leave it much later and the opportunity to turn our economy around will be lost forever!"
