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The government said that the move was prompted by current market conditions, coupled with the fact that 13 per cent of borrowers in the UK are coming off fixed rate mortgages this year and may need support.

The package aims to ensure that repossessions are kept to a minimum.

The new measures include expanded access to free legal representation at county courts throughout England for households at risk of repossession.

It also includes a strengthening of the National Housing Advice Service to provide a new debt advice service and more training for Citizen Advice Bureau staff and local authorities on debt advice.

The proposals will also see the government work with lenders to improve information for borrowers facing difficulties so they receive early advice and support on options available to them.

Housing Minister Caroline Flint said the package will help borrowers who are concerned about mortgage struggles brought on by the global credit crunch.

"Most lenders are now passing on interest rate cuts and we want to see the rest follow as soon as possible," Flint said.

"But for the minority of owners who may need support and advice now, we want to ensure it is there for them in the right place and at the right time."

Flint also stressed that the situation in the housing market was entirely different to that experienced in the UK in the early 1990s.

"The fundamentals of the housing market remain strong with high employment, low interest rates, and long term demand for homes from first time buyers," she added.

Earlier today, the Ministry of Justice release figures on mortgage possessions which showed that mortgage possession claims were up 16 per cent in the first quarter of 2008 compared with the first quarter of 2007. (See story.)