Stamp duty is to be suspended for a year on properties that cost up to £175,000 in a bid to boost the ailing housing market.

The long-awaited freeze on the unpopular levy is to take place from Wednesday.

It forms part of an emergency rescue package for hard-pressed home buyers and owners.

Gordon Brown has unveiled the flagship scheme to help people who are facing repossession stay in their homes.

The Prime Minister will hope it can tackle spiralling repossession figures and bolster his approval ratings, after Alistair Darling admitted the economy had hit a 60-year low.

Under the scheme, which will cost £1bn, vulnerable families will be offered the chance to sell their home and rent it back at a cheaper price.

They can sell the property to a registered social landlord who will clear the mortgage and then offer them a cheaper price in rent.

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1bn aid for struggling families facing repossession

Struggling families threatened with repossession will be able to sell part of their home to the council to stop them losing it under plans out today.

The £1billion Mortgage Rescue Plan is one of a raft of measures to be unveiled by Gordon Brown in a bid to prop up the slumping property market.

Government and property developers’ cash will be pumped into the scheme to help up to 9,000 families at risk of having their home repossessed. The plan will allow them to sell all or a percentage of their home to their local council or housing association and then rent it back at a more affordable level.

Up to £300million out of the pot is also going to be used to give 10,000 struggling first-time buyers help to get on the property ladder - which will also help building firms who face going bust in the wake of the credit crunch.

First-time buyers with a joint income under £60,000 will be able to get a 30 per cent loan towards a new-build property, which will only have to be paid back after five years. A senior Government source said: “Our plans are designed to help first-time buyers enter the market, support vulnerable families at risk from repossession and deliver more affordable homes sooner.”

Councils will get money to build 5,500 new homes over the next 18 months, while inner-city regeneration schemes which have stalled in the slump will also get a £200million kick-start.

However there was still no decision on a stamp duty “holiday”.

And, despite calls by the housing industry for a cut in interest rates, the Bank of England is expected to hold them at five per cent.

£300m to help first time buyers get on the property ladder

10,000 poor families to get chance to buy their first homes

£200m for schemes to regenerate hard hit inner cities

5, 500 council homes to be built over the next 18 months

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