Alistair Darling will help banks and building societies secrue more finance for new mortgages according to media reports

The government is planning to breathe new life into the mortgage market by increasing the supply of mortgage lending, according to The Times.

It said Chancellor Alistair Darling was poised to intervene to help banks and building societies to secure more finance to grant new mortgages.

The move would come after the virtual drying-up last year of the mortgage-backed securities market, which had become a crucial source of mortgage lending.

Darling is expected to order an extension of the Bank of England's emergency £50bn special liquidity scheme introduced this year to help to ease intense funding strains on banks triggered by the credit crisis.

The scheme allows banks to swap mortgage-backed bonds issued before the end of 2007 for much more tradeable Treasury bills that can then be used to raise funds in the markets.

The newspaper reported that the Chancellor is also still considering whether to suspend stamp duty temporarily as another way of boosting the market.

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