The government is to use 拢200m of its 拢8bn social housing budget to prop up ailing housebuilders by buying completed schemes and turning them into social housing, write Joey Gardiner and Tom Bill.

The move, which is reminiscent of the Tories鈥� 拢577m housing package unveiled in the market slump in 1992, will see developers and housing associations bid to the Housing Corporation to buy unsold private homes. A spokesperson for the corporation said all bids would be assessed in the normal way, adding: 鈥淚t鈥檚 about taking advantage of genuine opportunities.鈥�

The news came in a terrible week for housebuilders with Redrow, Galliford Try and Barratt all reporting sharp sales falls.

The move to address housing market problems was immediately labelled insufficient by industry figures.

Keith Miller, chief executive of the Miller Group, said the move would be a 鈥渄rop in the ocean. It misses the point 鈥� that there鈥檚 no confidence in the housing market because people can鈥檛 get mortgages鈥�.

Prime minister Gordon Brown (left) also announced an expansion of the government鈥檚 shared ownership programme, Homebuy, by allowing access to all first-time buyers earning less than 拢60,000, not just 鈥渒ey workers鈥�. This expansion will be funded with 拢100m taken from the government鈥檚 other low-cost home-ownership initiatives.

This is not enough. The situation demands drastic action

Stewart Baseley, HBF

Stewart Baseley, executive chair of the Home Builders Federation, which has also been campaigning for a temporary halt to stamp duty, said: 鈥淭his announcement is not enough. The situation demands drastic action.鈥�

The move came after Barratt Group said on Wednesday that reservations had fallen 50% in recent weeks. Mark Clare, Barratt鈥檚 chief executive, said conditions had fallen sharply since the end of March because of lack of mortgage availability.

But the 拢3bn-turnover company did not, as some had feared, announce a rights issue to repay the 拢600m debt it raised to fund the 拢2.2bn purchase of Wilson Bowden last March.

Instead it announced a three-year repayment extension for 拢400m of the debt. It added that it had reduced its staff by 200, or 3%, since the downturn.