The package is a key part of Brown’s efforts to relaunch his premiership after a bruising few months and he is expected to unveil plans later this week or next to help households cope with the rising cost of fuel bills.

House prices in Britain are sliding and home repossession orders in England and Wales have risen to their highest level since the housing market crash of the early 1990s.

The Treasury said the rise in the threshold would cost it an extra 600 million pounds and that half of home transactions would now be exempt from duty. The Council of Mortgage Lenders estimated that if the new threshold had been in place throughout 2007, some 215,000 borrowers who paid it would have been exempt.

Some analysts cautioned that a previous stamp duty holiday introduced by the Conservatives in the early 1990s housing market slump had had little discernable impact.

"If it’s marginal finance and marginal savings people are after I don’t think this changes much at all. People would be better waiting for house prices to fall," said Ed Stansfield, property economist at Capital Economics.

However shares in British housebuilders such as Taylor Wimpey climbed sharply on the package, which included a plan to offer five-year interest-free loans to some first-time buyers moving into new properties.

The government said the housing package would also help vulnerable families struggling with mortgage payments avoid losing their homes and bring forward funding for new social housing from existing budgets.

Communities Secretary Hazel Blears said the package was aimed at "people who just need that little bit of extra help to keep them afloat."

She said the package would help about 10,000 people to buy a first home who would otherwise not have been able to do so.

The Conservatives said Brown’s housing package would not help the vast majority of families facing a rising cost of living and falling house prices.

"I suspect what we will see in the coming weeks is a desperate and short-term survival plan for the prime minister rather than the long-term economic plan the country needs," the party’s economic spokesman George Osborne said in a statement.

(Additional reporting by David Clarke, Adrian Croft, Matt Falloon and Myles Neligan.)