Michael Gove does not have "confidence" in the leadership of a housing association that owned the flat where two-year-old Awaab Ishak died following exposure to mould, a government source has said.
The housing secretary met Rochdale Boroughwide Housing (RBH) representatives on Thursday in what the source describes as an "unsatisfactory meeting" in which the association did not adequately explain how it intends to ensure tenants' safety.
'"The meeting with RBH was unsatisfactory," the government source said.
"They yet again failed to answer basic questions about their operations and how they will ensure that tenants are safe in their homes.
"The secretary of state does not have confidence in the leadership of RBH, and will continue to pay very close attention to their work, in close cooperation with the regulator.
"He will not hesitate to take further action if necessary."
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Last week, a coroner ruled that Awaab, two, died from a respiratory condition caused by mould in a one-bedroom flat in December 2020 which was managed by RBH association.
The housing body has admitted that it "got things badly wrong" and said it has started to take "immediate action".
Awaab's parents, originally from Sudan, had repeatedly complained about the mould.
His family has accused the housing association of racism, saying there was "no doubt at all" they were "treated in this way" because they are not from the UK.
The toddler's death sparked anger over the poor state of the home he and his family were forced to live in - leading to RBH chief executive Gareth Swarbrick being sacked.
Earlier today, the housing secretary announced he has blocked £1 million in funding RBH was due to receive to build new homes.
Mr Gove said: "If you can't even run the homes properly that you are currently responsible for, then you certainly can't be building new homes."
The Board of RBH said in a statement: "We acknowledged again that we got things wrong and how deeply sorry we are for the loss of Awaab and that we know that our words would not take away the pain that is being felt by his family.
"We explained to the secretary of state that we welcomed the impartial scrutiny that the regulator will bring and we look forward to working more closely with all parties over the coming months.
"We are absolutely focussed on improving the quality of our existing homes and improving any operational areas where we have previously under performed.
"Our immediate priority is to maintain the stability of the organisation and to appoint a new interim chief executive which we are in the process of doing."
The housing secretary also met with Awaab's relatives on Thursday, which lawyers for the family described as "productive".
They said during the meeting, Mr Gove committed to an "Awaab's law" that would improve the experiences of those living with mould and damp in their properties.
"The family are pushing for the implementation of an Awaab's law to ensure that no other family go through what they have been through," lawyer Christian Weaver said.
Mr Weaver added that Mr Gove promised to return to Rochdale to meet the family in six months' time.
In the Commons, the Labour MP for Rochdale - Tony Lloyd - paid tribute to Awaab Ishak's family and pushed ministers for an inquiry into Rochdale Boroughwide Housing.