Gordon Brown yesterday battled to shore up confidence in the housing market as new figures showing a 2.5% monthly fall in house prices raised the prospect of a politically damaging slump. Financial Times

The prime minister immediately took to the airwaves to assure homeowners that the biggest monthly fall in the Halifax survey since September 1992 was 'containable' and the Bank of England was in a position to cut interest rates.

The Treasury will today announce that Sir James Crosby, former chief executive of HBOS, the UK’s biggest mortgage lender, will lead a review into improving wholesale mortgage financing in an attempt to pump more money into the sector.

The flurry of activity is a sign of Brown’s fears that the impact of the credit crunch could be about to move from the financial sector to homeowners in middle Britain, delivering another blow to his ailing government.