Brits will be able to use housing benefit payments to meet their mortgage costs under plans due to be announced today.
Boris Johnson will outline new housing proposals in a speech in Blackpool as he scrambles to reset his premiership after surviving a bruising no confidence vote.
The Prime Minister is expected to unveil pledges to boost home ownership, allowing lower paid workers to use their benefits to count towards a mortgage.
Housing benefit, which costs the Government £30 billion a year, cannot currently be declared as income towards a mortgage.
But the idea has raised questions on how claimants can save for a deposit as people only qualify for housing benefit if they have less than £16,000 in savings.
Mr Johnson will also set out his intention to extend Margaret Thatcher's 'Right to Buy' scheme to allow housing association tenants to purchase their homes at discounted rates.
But Housing Secretary Michael Gove said there would be a cap on the number of people who can benefit from the expansion of the scheme - and was unable to put a figure on it.
He told Sky News: "That's something I will be discussing with housing associations."
Critics have raised concern that the policy will run down vital stock of housing association properties, but Mr Gove insisted the government would ensure there are new houses to replace those bought up.
Mr Gove said: "One of the things that we will be doing is making sure that there is a replacement - a like-for-like, one-for-one replacement.
"Yesterday I introduced legislation into the House of Commons that means there will be a new levy on developers.
"That means that when new developments occur, when new homes are built for sale by the big housing companies, we will extract some of the money that they make and some of that money will be set aside explicitly to make sure that there is more affordable housing or council housing for people who need it."
Labour warned that the Government hadn't thought through the details of the scheme .
Shadow Levelling Up Secretary Lisa Nandy told Sky News: "The Government can say that it wants to open up mortgages to people on housing benefit, but unless the lenders agree to do it, it's not going to happen.
"There are real practical problems as well.
"To qualify for Universal Credit, you've got to have savings of less than £16,000, which means that most people who the Government are trying to reach with this announcement are not going to have anything near the amount that they need for a deposit on a home in order to qualify for that mortgage."
Polly Neate, chief executive of Shelter, said: “The Prime Minister’s housing plans are baffling, unworkable, and a dangerous gimmick.
"Hatching reckless plans to extend Right to Buy will put our rapidly shrinking supply of social homes at even greater risk."
She warned that the "maths doesn't add up" and plans would continue a "destructive cycle" of selling off and knocking down thousands more social homes than get built each year.
It comes amid serious squeezes on household budgets, with a petrol price hike which takes the average cost of a full tank for a 55-litre family car to more than £100 for the first time.
In his speech, Mr Johnson is set to say: "We have the tools we need to get on top of rising prices.
"The global headwinds are strong, but our engines are stronger.
"And, while it's not going to be quick or easy, you can be confident that things will get better, that we will emerge from this a strong country with a healthy economy."
Lib Dem Deputy Leader Daisy Cooper accused the PM of spouting "more hot air and waffle".
She said: “If the Prime Minister had any clue how to help millions of families and pensioners he’d cut VAT, ditch the National Insurance hike and tackle the housing crisis.
"Instead he’s going on a jolly to spout more hot air and waffle rather than getting a grip on his Government."
Proposals for renters to be able to buy their social homes at a discount first appeared in David Cameron's 2015 Tory manifesto.
After that pledge failed to materialise, Mr Johnson committed to consider new pilots for the scheme ahead of the 2019 general election.
Former Treasury boss Nick Macpherson tweeted: “One day many years hence HMG [Her Majesty's Government] will accept that the way to make housing affordable is to ensure supply outstrips demand: that would be leadership.
“Until then, expect numerous initiatives to pump up demand to support those who own property at the expense of those who don’t."
