Housing developments that have not gone ahead or been left unfinished because of the credit crunch could be rescued by a £1 billion intervention to be announced by Alistair Darling tomorrow.

In a move to help the construction industry and revive the market, the Chancellor will say in his Budget that the Treasury is ready to go into partnership with private companies to ensure that developments proceed. Whitehall will buy houses on some estates to turn them into social housing or shared equity schemes.

In some cases the Government will offer to complete the local roads and other infrastructure that a private company is normally required to do as part of building a development.

The Times understands that Mr Darling will also extend to the end of this year the suspension of stamp duty on properties costing £175,000 or less.

The change was brought in last September to try to kick-start the housing market, but ministers have decided that more needs to be done. Tomorrow’s moves are seen as desperately needed if the Government is to reach its target of building 240,000 homes a year by 2016. The number built in 2008-09 was 207,000, but that figure is falling drastically, with developers unable to proceed with projects because of lack of demand from buyers.

A source said last night: “We need to unlock these developments but just as important we need to ensure there is a construction industry left when the recovery gets under way. This is a perfectly legitimate government intervention in the market.”

In a separate move, up to 40,000 homeowners who have lost their jobs or had a sudden loss of income are expected to be helped under the Homeowner Mortgage Support Scheme to be launched today.

Margaret Beckett, the Minister for Housing and Planning, has reached agreement with a number of banks to take part in the scheme where those with mortgages of up to £400,000 and savings of less than £16,000 will be given help with interest payments for up to two years if they have suffered a sudden drop of income.

Homeowners will be required to fund 30 per cent of the payments and will have to repay the entire amount once their financial situation improves. But the Government will underwrite the payments for the lender if the householder defaults and the home has to be repossessed.

Most of the institutions that have agreed to participate are believed to be those already funded by the taxpayer, including the Royal Bank of Scotland. The scheme, announced at the end of last year, had to be postponed as lenders failed to come forward.

The Lloyds Banking Group and Northern Rock are now expected to take part, but other mortgage lenders have been reluctant to sign up because of the high administrative costs. Some are expected to set up similar individual schemes pledging to provide the guarantees themselves.

The £1 billion housing intervention will form a key part of measures to be announced tomorrow that may be presented as a second “stimulus” to the economy following on from the £20 billion announced in the Pre-Budget Report.

As The Times reported yesterday there will be about £600 million for green technology measures and £2 billion to help the unemployed.

It seemed increasingly likely last night that a “scrappage” scheme to encourage people to buy new cars would be introduced, but it is likely that the industry will have to foot half of the £2,000 incentives to motorists.

As Mr Darling and Gordon Brown met to discuss how far to go in outlining measures to get the finances back into balance, the Conservatives pointed to an admission in a government report that the recession in Britain will be worse than in other countries.

A document from the Department of Communities and Local Government on migration inflows says that “all other source countries grow more rapidly than the UK relative to our July forecast up until 2011”. A table in the paper puts the contraction in the UK economy at 2.7 per cent, worse than the rest.

It also emerged that Mr Darling is likely to extend by a year or two the period he says it will take to get Britain’s finances back into balance. It could mean that it is about ten years before Britain is back in the black.

George Osborne, the Shadow Chancellor, said: “Promises to balance the budget in ten years are laughable from a Labour Government that can’t get its fiscal forecasts right from one month to the next.”

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