Housing minister Caroline Flint set out a series of measures to deliver more affordable homes, support homeowners and help first-time buyers.
Rent to home buy allows households earning under 60,000 a year to rent a home for two or three years at a discounted rate before having the option of buying a share.
The scheme is designed to give people time to save for a deposit while paying for rent.
London & Country head of communications David Hollingworth says: “The scheme is providing extensions to options for those making the first step into property.”
The plan includes proposals to build up to 75,000 homes in 20 towns, increasing the number of homes in these areas by 20 per cent by 2016.
Flint says: “We are determined to continue to do everything possible to promote long-term stability and fairness in the housing market. The international credit crunch has created significant challenges not just for the UK housing market but also in other parts of Europe and the US. The long-term need to provide more homes has not gone away. We have a growing and ageing population and will only see worsening affordability unless we increase housing supply.”