George Osborne yesterday announced his Help to Buy Mortgage scheme will continue running until 2020 in a bid to build 120,000 more homes.

The Chancellor will use Wednesday’s Budget to declare a £6 billion extension of the scheme, which was originally due to wind down in 2016.

In an interview with the BBC yesterday, Mr Osborne implied the extension of the scheme, which helps families buy homes worth up to £600,000, will contribute to securing economic recovery.

The Chancellor also announced that a garden city will be built in Ebbsfleet in Kent, which will initially provide 15,000 homes.

The scheme is just one aspect of the upcoming budget which is framed around improving the lives of working-class voters in marginal Conservative seats by helping them to buy their own homes and pay less tax.

Mr Osborne, said: “This means more homes, this means more aspiration for families, this means economic security and economic resilience. Britain has got to get building.”

The Chancellor is expected to increase the point at which people start paying income tax to £10,500. Although the point at which people start paying 40 per cent is likely to stay at around £41,500.

However, criticism immediately arose from the Shadow Chancellor Ed Balls, who believes the Help to Buy Scheme needs to be cut dramatically from £600,000 to under £400,000.

Mr Balls, said: “The lack of funding for affordable housing, alongside a housing market that has been very slow to respond to rising demand, means there is a real risk for our economy.”

The Shadow Chancellor claimed that if the current Chancellor did not contribute enough to supporting the housing market and a wider recovery, mortgage rates might start rising earlier than they should.

He said: “If George Osborne really wants to make a difference he would have been much more radical on house-building in the last three years and today – and he’s not been. It’s a damp squib.”

He alternatively proposed an emergency help to build scheme, underpinned by new government strategies, to support the building of a further 10,000 houses this year.