FAMILIES in danger of losing their homes will be able to defer part of their mortgage repayments to give them “breathing space” through the recession, under a £1bn rescue package unveiled by Gordon Brown yesterday.

The Prime Minister promised that no one who was genuinely attempting to pay their mortgage need fear repossession, once the Homeowners’ Support Mortgage Scheme is in place early next year.

Under an agreement struck with eight major banks – responsible for 70 per cent of mortgages – the Government will underwrite up to 100 per cent of interest payments owed to the lender for up to two years.

At present, only benefit claimants with mortgages of up to £200,000 can get help, leaving two-income families where one partner loses their job at the mercy of a repossession order.

The new scheme will also cover workers suffering a “significant loss of income” – perhaps because of the loss of overtime or a switch to a lower-paid job – with a higher mortgage limit of £400,000.

Only families with savings above £16,000 will be excluded.

Furthermore, although only interest payments can be deferred, No10 said it expected lenders to consider requests to switch to interestonly mortgages, which would mean all payments would be covered.

The announcement came during the debate on the Queen’s Speech in the Commons, although it is not expected to require legislation before it can begin.

It represented a rabbit pulled dramatically out of the Prime Minister’s hat to grab the political initiative and wrongfoot Tory taunts that the speech lacked measures to help people through the recession.

Earlier, the Council of Mortgage Lenders (CML) warned ministers that repossessions were expected to soar to 75,000 next year – very close to the peak of 75,500 reached in 1991 during the last recession.

Two weeks ago, figures from county courts across the region reported a 25 per cent rise in the number of repossession orders made by lenders against householders unable to pay their mortgage bills.

Yesterday, Mr Brown told MPs: “We will do everything in our power so that no hardworking family which demonstrates to their bank a willingness to pay should face the fear of repossession.”

He said no country was going so far to help recessionhit homeowners, hailing the deal as part of a new “Charter for Mortgage Holders”.

That charter also includes promises by some lenders, including Northern Rock yesterday, not to start repossession proceedings for six months and orders to courts to only seize homes as a “last resort”.

The eight lenders that have signed up to the scheme are HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays, Royal Bank of Scotland and HSBC. More are expected to follow.

Ministers expect to incur a liability of £1bn by guaranteeing the deferred payments, but to lose only £100m in the long run from homeowners who default.

The CML welcomed the initiative, provided it did not become “a charter for ‘won’t pay’ borrowers to avoid their responsibilities”.

A spokesman said: “It will provide welcome reassurance to the vast majority of borrowers that the Government and lenders are doing all they can, in partnership, to help those customers who can’t pay due to a change in circumstances as we enter a recession.”

The announcement overshadowed the annual State Opening of Parliament and a Queen’s Speech that featured only 12 Bills.

A Policing Bill will give local councils extra powers to block lap-dancing clubs, as well as outlawing sex with a trafficked or pimped prostitute, and banning “irresponsible”

drink promotions by pubs and clubs.

Durham City MP Roberta Blackman-Woods, who has campaigned for town halls to have greater powers to stop lap-dancing clubs being opened in their communities, said she was “extremely pleased” following yesterday’s announcement.