The measures are aimed at delivering more homes, helping first time buyers, supporting existing homeowners, and helping the housebuilding industry which is currently facing tougher conditions.

The government plans to buy up homes which house builders are unable to sell because of the current economic downturn.

Flint has already earmarked £200m to buy up surplus housing stock, for which crisis-hit house builders cannot find buyers, and turn these into affordable homes.

Today she announced that more funding on top of the £200m could be made available if the properties are in the right place, at the right price and offer good standards.

Also announced is the location of new local housing companies, which will see councils and developers using surplus land for homes.

The first 4 Local Housing Companies will be in Barking and Dagenham, Newcastle, Nottingham, and Manchester. Under this new partnership, councils put forward their surplus land into the Local Housing Company and have a full part in agreeing the development, which must include at least 50 per cent affordable homes. In return, private sector partners will provide the equivalent investment and homes and skills needed to build the homes.

Other measures include:

*New proposals to deliver up to 75,000 homes in 20 more towns and cities, with £100m going into these areas for the schools, hospitals and other facilities needed to support homes. The councils in these areas of high demand, from Northumberland to Cornwall, have been selected as New Growth Points and have pledged to increase the number of homes in their local areas by up 20 per cent by 2016, delivering a total of up to 75,000 extra homes.

*Allocating the first tranche of a £510m funding pot to reward councils who are working to bring land forward for development, helping to provide more homes and give the house building industry greater certainty that suitable land will be available when the market picks up. The Housing and Planning Delivery Grant is a direct incentive for councils who are taking action to meet the housing needs in their areas and rewards those putting plans and land allocations in place.

Housing Minister Caroline Flint said:

"The package being announced today will both help people facing difficulties right now, and lay the foundations to help meet the long term housing needs of the country.
 
"We are determined to continue to do everything possible to promote long-term stability and fairness in the housing market. The international credit crunch has created significant challenges not just for the UK housing market, but in other parts of Europe and the United States.

"However, the long term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability unless we increase housing supply."