A nationwide mortgage rescue scheme has been proposed to protect households at risk of repossession.

Under the National Housing Federation plans, housing associations would be aided by the Government to buy up thousands of homes likely to be repossessed and either rent them back or resell them to their original owners under a low cost homeownership scheme.

The paper, Protecting Households, Delivering Homes, proposes that money targeted for building new social homes over the next three years should be redistributed to allow housing associations to operate mortgage rescue schemes - and use developed and partially developed private sites currently sitting empty.

Under the federation's proposals, housing associations would also buy the properties of households in trouble at a fair price and allow them to either change tenure to low cost home ownership, enabling the household to buy their property back when their financial situation improves, or to social renting, enabling the household to remain in situ as social tenants.

The Government has set a target for housing associations to build around 157,000 new homes by 2010/2011, as part of its wider aim for three million new homes to be built by 2020.

David Orr, NHF chief executive, said: "A weakening housing market will increase the number of unsold or difficult to sell properties - and sites available for purchase at prices lower than in recent years.

"This will create opportunities for housing associations and the affordable housing programme to continue to provide and, possibly, increase the supply of affordable homes. But only if the situation is managed effectively."

Communities and Local Government did not comment directly on the proposals put forward by NHF.

But a CLG spokesman said: "We are taking action to support borrowers and industry in the current housing climate, including a £200 million fund to buy unsold homes on the open market, more face-to-face debt and legal advice, and are constantly looking at what more we can do.

"We are committed to delivering 45,000 social homes a year and are supporting Housing Associations with £8 billion to achieve this."

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