First-time buyers could be priced out of the housing market when Home Information Packs (HIPs) for one and two bedroom houses are introduced, the Government has been warned.

The Royal Institution of Chartered Surveyors said a full roll-out of the packs, proposed by housing minister Yvette Cooper, will lead to a lack of demand, with thousands of homeowners deciding against selling their homes.

It added that it estimates that 300,000 people will not put their homes up for sale due to the added cost of HIPs, and that first-time buyers will be squeezed out of the market.

A spokesman for the group said: "Rolling HIPs out to one and two bed properties could find first-time buyers caught between a rock and a hard place as accessibility to the market would go off the scale.

"If the housing minister genuinely wants to improve the plight of first-time buyers, she should not continue with this flawed policy."

Under the plans, homeowners will have to pay out an extra £300 to £500 for a HIP.

Packs for homes with three bedrooms or more were rolled out in September, after which chartered surveyors reported a 67% drop in sales.

But the Government denied claims that HIPs are distorting the market, saying its own research into releasing the packs had showed they have little impact on prices.

It admitted that there may be some "short-lived" impact on the market as people timed putting their homes up for sale around the introduction of the new packs but said the final stage of the roll-out will be "gratefully received".

Paul Broadhead, deputy director general of the Association of Home Information Pack Providers, said: "This vital step has now clearly reinforced Government's commitment to the successful implementation of HIPs and we look forward to seeing the positive impact.

"HIPs are here to stay. By working together with the wider industry, we can now build upon this foundation and really revolutionise the market for the benefit of the consumer and the industry."

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