Housing minister Caroline Flint has said the government''s "rent first, buy later" scheme was an attempt to encourage growth in the market.

With mortgage approvals and sales volumes both down since the start of the year and the 100 per cent mortgage market defunct, she said people are struggling to get on the property ladder despite falling prices.

Commenting on the Whitehall scheme, the Intermediary Mortgages Lenders Association (IMLA) said: "We welcome all positive action from the government to offer support to first-time buyers.

"But the government''s primary concern should be the drastic lack of liquidity in the market."

The IMLA said the "rent first, buy later" scheme didn''t amount to a long-term cure of the current problems in the market, saying that the initiative was nothing more than a "sticking plaster".

Announced yesterday, the new initiative will allow households earning less than £60,000 a year to rent a property at a discounted rate with the option to buy it in two or three years time when the market has settled.