Kerry Katona is set to sell her £1million home in a bid to stave off spirally debts, it's been reported.

The former Atomic Kitten singer apparently fears she will be unable to pay the £4,000-per-month mortgage on her Cheshire property after losing her £250,000 contract with supermarket chain Iceland.

The company dropped Katona from its campaign earlier this week after pictures allegedly showing her snorting cocaine were published in a Sunday newspaper.

The deal, which saw Katona front Iceland's TV adverts, has been described by friends as her “only big pay packet”.

A source told The Sun newspaper:  "Kerry's life is a mess. She's being chased by debtors and now the police. How much worse can it get?"

As Entertainmentwise reported yesterday, Katona is currently on a family holiday in Tenerife.

Kerry's worst moments