Gordon Brown is planning to launch the new rescue package next month.
The government has unveiled a new mortgage bailout plan for homeowners.
According to initial details regarding the Homeowner Mortgage Support Scheme, people who are having trouble with paying off their home loans are to be given a "holiday" from repayments lasting two years. The cost of these moves is also to be met by the taxpayer, causing potential liabilities of £1 billion.
The policy intervention comes as the UK is facing a major property downturn. Figures from lenders show that house prices are down by around 15 percent, year on year, while banks said last month that the annual drop in mortgage approvals was now 50 percent.
Coupled with that is the rising number of repossessions, which comes as people struggle to make their mortgage repayments in the downturn. Council of Mortgage Lenders forecasts suggest that the number of people losing their home could increase by 70 percent from 2007 to 2008.
Prime minister Gordon Brown said: "Hardworking households that experience a redundancy or severe loss of income as a result of the downturn will be able to defer a proportion of their interest payments for up to two years as they get their family finances back on track."
Major lenders covering around 70 percent of the market have already signed up to the Homeowner Mortgage Support Scheme. It is scheduled to launch in January.
