On Monday, David Cameron said the initiative includes a £400m fund, which will go to stalled schemes that are ready - but lack necessary finance.
Building work could begin as early as next July. The Prime Minister and his deputy Nick Clegg are expected to say the plan will create over 32,000 jobs and write in the plan's foreword: "The housing market is one of the biggest victims of the credit crunch: lenders won't lend, so builders can't build and buyers can't buy."
Meanwhile, first-time buyers will be able to borrow up to 95% of the value of the properties, with the government underwriting part of the risk.
The news comes just as new figures reveal that only 121,200 new homes were made available in 2010-11, representing a fall of 6% from the previous year.
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Commenting on the plan, Labour's Shadow Communities and Local Government Secretary Hilary Benn, and Jack Dromey, Labour's Shadow Housing Minister, said the Government's housing plans were "failing".
Speaking on Monday morning, Jack Dromey said: "George Osborne is giving back only 10% of last year's £4 billion cut to housing investment to build just 3,200 affordable homes.
"With millions in need of a decent home at a price they can afford, the country is gripped by a growing housing crisis. Despite 127 Government announcements, more than one a week since the coalition took power, their own figures show a 6% fall in new homes and a 10% increase in homelessness.
"Their housing policies are failing and George Osborne's mismanagement of the economy is making things worse, holding back housebuilding.
Hilary Benn said that the average age of first time buyers was projected to rise to 44 and that people needed help getting mortgages.
"Labour has been calling for action on mortgages and a Mortgage Indemnity Guarantee Scheme is an idea first proposed by Labour in Scotland. People are relying on the Government to get this right. It would be yet another false dawn if the scheme artificially raised house prices or further risked the stability of banks."
(DW/BMcC)
