It is expected the sector is unlikely to experience growth until at least 2014.
The findings come as the latest Construction Trade Survey is released.
Building contractors revealed that public new housing and public non-housing were the worst sectors hit, with a balance of 38% and 34% respectively.
Output fell in the private industrial and private commercial sectors 29% and 27% respectively.
26% of contractors reported a decline of orders in the third quarter, while 17% of civil engineers reported a drop in workload.
Half of large and medium sized building contractors reported a reduction in tender prices.
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Noble Francis, Economics Director at the Construction Products Association said: "Whilst the public sector construction activity has been falling for some time as a result of the government’s cuts, private sector activity is also now falling sharply.
"On top of this bad news, infrastructure work declined in Q3, which is extremely concerning given the number of recent announcements from government aimed at stimulating infrastructure activity."
Stephen Ratcliffe, Director UKCG, said: "The industry welcomes the steps Ministers have taken to boost confidence in construction, but the focus must now be on delivery. Programmes such as the UK Guarantees Scheme are a positive step, but we need to see shovels in the ground as soon as possible."
Julia Evans, Chief Executive of the National Federation of Builders, added: "The government’s moves to streamline and speed up planning, fast track and fund infrastructure and fund more house building will not yield immediate results, but they are the building blocks necessary to ensure a sustainable recovery for construction. The more immediate consideration for government is to continue to ensure that access to finance for small and medium-sized businesses remains a high priority."
(IT)
