Homeowners facing the threat of repossession were yesterday offered a government lifeline in the form of a £1bn scheme that will allow mortgage interest payments to be deferred for up to two years.

Gordon Brown, speaking at the start of the debate on the Queen’s Speech, said eight of Britain’s biggest banks were backing the scheme, which follows warnings from mortgage lenders that up to 45,000 homes could be repossessed this year.

Brown, scrambling to enliven a low-key Queen’s Speech with a high-profile initiative to help tackle the recession, had given banks less than 24 hours’ notice of the scheme.

Banks said they remained in the dark about important elements. However, the Council of Mortgage Lenders insisted it would not be a 'charter for "won’t pay" borrowers'.

Brown told the Commons the government would underwrite deferred mortgage interest payments for up to two years. 'We want to give people a breathing space at quite a difficult time,' his spokesman said.

Financial Times, Daily Telegraph