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The £1bn package of measures introduced by the government to kick start the housing market is "a drop in the ocean", critics have warned.

The announcement on Tuesday pledged cash for more equity loans to first-time buyers, faster income support for mortgage interest payments and new powers to councils to bail out homeowners under threat of repossession.

First-time buyers with incomes of less than £60,000 will be eligible for 30 per cent loan-to-value loans from the department for communities and local government, with no repayments due for five years.

And local authorities have extra cash to help people in danger of losing their homes through existing mechanisms, such as sale and leaseback, shared ownership with a social landlord or more equity loans.

The DWP's mortgage interest payments for people on income support, pension credit and income-based jobseeker's allowance payments will be increased to loan values of £175,000 from £100,000 and applications times will be cut from 39 to 13 weeks. Last year, 200,000 people received £400m in SMI.

Stamp duty has also been axed on all properties worth up to £175,000 and another £400m will be spent on social housing.

Hazel Blears MP, communities secretary, called the measures "practical action to help those most affected by the current state of the housing market".

However, tax expert George Bull, partner and head of the tax faculty of accountants Baker Tilly, said the government was "political headline-grabbing" over stamp duty.

He said: "A quick look at the statistics suggests that only one in six properties sell for between £125,000 and £175,000, so only they will benefit.

"Also, most builders have large numbers of properties available and they typically sell them stamp duty land tax-free, so any benefit will not be felt there."

According to the latest figures from the Council for Mortgage Lenders, about 40,000 first-time buyers have taken out loans for homes this year so far, on an average income of £35,000, while the goverment's scheme is only designed to cover 10,000 people.

Also, more than 40,000 possession orders were taken out in the first three months of 2008, according to CML figures, on top of a little less than 150,000 in 2007.

Michael Coogan, director general of the CML, said: "This is welcome, but until more funding is available we are still some way from restoring long-term stability to the housing and mortgage markets."

Paul Bettison, housing spokesman for the Local Government Association, called the moves "a step in the right direction". However, he said: "There would also be concerns that the amount of money made available might not be enough to make a significant difference in the current housing climate."

Nicholas Leeming, director of Propertyfinder, said: "The government's plan to help 10,000 first-time buyers is a drop in the ocean - even in today’s quiet housing market."

The DCLG was unable to provide information on how eligiblity for the equity loans would be vetted in cases of excess demand or how councils would limit mortgage rescue uptake to 6000 nationwide.