Wireless network connection unstable when using VPN

[#1]

Hi folks
I have a desktop PC and a laptop at home that I connect to broadband using a netgear router. The laptop and desktop get their IP addresses from the router via DHCP in the normal way. I generally have no problems with my wireless connections on either machine, until i start using a VPN application on my laptop to connect to my office network.
Once I've completed the VPN connection, the problems start. After a few minutes the laptop wireless connection drops. When I look at the laptop ipconfig it has lost the DHCP address from the router and instead has a 169.xxx. Weirdly, however, a random amount of time later it usually picks up the wireless connection again, for a few minutes, before dropping it again. The actual wireless signal throughout is strong - it's the IP address/connection that is getting lost.
I know this is only related to wireless because if I stick an ethernet cable in the laptop, to the router, the connection whilst using VPN is absolutely fine and stable. So in a sense I can get by but sooner or later I'll probably trip over the LAN cable that is currently running up the stairs
In my limited attempts to troubleshoot i have deactivated every firewall i can find (!) - plusnet, router and pc, which doesn't help.
If anyone has any thoughts I'd be very interested to hear. Many thanks!

[#2]

I would think its getting confused and probably seeing a DHCP server on the vpn and trying to get the ip from that and failing.
Try giving it a fixed ip and see if that solves it. I would guess that there is a lot of traffic going over the link which is overloading the system so it cant keep up

[#3]

Thanks Samuria. The fixed IP address has helped a lot. It's still dropping the wireless connection occaisionally, but my desktop does this too - think that's probably an issue with my router (connection speed drops to 1mbs for a few mins at a time).
Appreciate the help

[#4]

If the wireless is drooping you could try
moving router or pc
change the channel on the router pc
download free netstumbler from http://www.netstumbler.com/ this will show if there is anyone near that maybe the problem and the best channel to set the router to.
The next thing is noise from anything like fridge, tv, sky, wireless, cables often a slight movement of the router may make all the difference.