"Much has been said about the case for launching a U.S.-style agency but it seems unlikely that it would be right to tackle this century’s problems with last century’s solution particularly given the time it would take to create any such agency," the report said.

The U.S. authorities had to step in this month to prop up Fannie Mae and Freddie Mac after panic erupted among their investors over the mortgage companies’ solvency.

Crosby’s interim report provides an analysis of how the mortgage markets became disrupted and what range of possibilities exists to ease the crunch.

Mortgage lending has fallen sharply in Britain this year as the credit crunch forces banks to toughen up their lending terms to would-be house buyers.

House prices are also falling swiftly, raising pressure on an already embattled government to move swiftly to restore confidence.

One mortgage lender, Northern Rock, had to be nationalised earlier this year after it struggled to get funding on money markets and suffered the first run on a UK bank in more than a 140 years.

The Bank of England’s initial mortgage swap plan was welcomed by financial institutions, but money markets remain tight and lobby groups say more needs to be done. The Bank Special Liquidity Scheme comes to an end in October.