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The government has admitted it may miss its targets for affordable housing, despite the 拢1bn housing rescue package it announced on Tuesday.

Housebuilders have said the measures, which contain no new money, are inadequate to tackle the scale of the collapse in the industry following the credit crunch, with mortgage approvals down 71% in July.

Unveiling the package Richard McCarthy, director general of housing and planning at the communities department, admitted the government might not be able to build the number of affordable homes it had planned to over the next three years because the amount of subsidy needed for each home was likely to rise.

The government had wanted to build 70,000 affordable homes a year by 2011. However, the 拢400m affordable housing programme announced as part of the package on Tuesday does not allocate any new money, but rather allows the department to spend money planned for 2011 now.

McCarthy said: 鈥淚t may well be the case in the short term [that we aren鈥檛 able to build the number of homes planned], but we will bear down on costs as much as we can.鈥�

Andrew Wells, director of new homes and sustainable development at the department had previously admitted: 鈥淢ore generous grant rates will be available to organisations building affordable homes. We will be prepared to fund to a higher level.鈥�

In total, 拢700m of housing spend and 拢300m reserved for economic regeneration projects have been brought forward to fund the package.

Of this, 拢300m will go towards a new shared equity scheme called Home Buy Direct, which will involve housebuilders and the government each taking a 15% share in homes for first-time buyers. The details of the scheme have not been agreed, and no builders have signed up yet.

Alastair Stewart, housing analyst at Dresdner Kleinwort, said: 鈥淭his will have the square root of bugger all impact, that is if it doesn鈥檛 make things worse. This suite is so complex and so hazy then any first-time buyers could be put off.鈥�