Brown cuts stamp duty at start of fightback

Brown's government said properties worth less than 175,000 pounds would be exempt from the tax, known as stamp duty, for one year, up from a 125,000 pound threshold now.

That is expected to take half of all home deals out of the tax net and cost the government an extra 600 million pounds at a time when the public finances are already stretched.

Brown needs to revive consumer confidence in the face of the credit crunch and soaring energy bills. A Times newspaper poll showed his Labour Party was 15 points behind the opposition Conservatives - and on track to lose the next election.

The stamp duty step was accompanied by a one billion pound package to aid first-time home buyers and people struggling to keep up with mortgage payments, as well as helping property developers to shift newly-built homes.

Shares in British homebuilders and home improvement-retailers jumped on the news but analysts were sceptical about whether the moves could pull the housing market out of its worst slump since the early 1990s.

"The stamp duty holiday may provide the domestic housing market with a marginal stimulus but we doubt it will have a major effect in getting the housing market moving again," said Philip Shaw, chief economist at Investec.

The package is a key part of Brown's efforts to relaunch his premiership in property-mad Britain after a bruising few months. He is also expected to unveil measures later this week or next to help households cope with the rising cost of fuel bills.

"These are the things a government should do to help people as we come through what is a difficult situation and then show that our economy is resilient and will come through these problems," he said after the housing package was released.

HOUSING BUST