The Budget delivered a long overdue £250m FirstBuy aid package for first time buyers that Government claimed would support 50,000 construction jobs.

George Osborne also unveiled plans to release large tracts of land with planning consents through public land auctions and promised big planning reforms.

These include a presumption to grant planning to sustainable housing developments and a pledge to force councils to handle applications within 12 months.

The Government will also consult over plans to allow commercial space to be converted to residential without the need for planning.

He also agreed to water down requirements to force builders to deliver zero carbon homes by 2016, saying the Government would now look at more realistic targets that didn’t make sites uneconomic.

Mark Clare, chief executive of Barratt, the UK’s largest house builder by output, said the initiative to help new buyers on to the property ladder was “exactly the tonic the housing market needed”.

“It will give young people in their 20s and 30s renewed hope of buying their own home with a deposit of just a few thousand pounds – precisely the opportunity which their parents’ generation took for granted,” he added.

The Home Builders Federation said the measures addressed the major constraints to home building – the lack of mortgage availability, the planning system and over regulation.

HBF Executive Chairman Stewart Baseley said: “The severity of the housing crisis dictates that work doesn’t stop here.

“It is crucial that all yesterday’s announcements are built on, regulation is reduced, land supply increased and the planning system simplified.  The Budget shows ministers are listening and serious about tackling our housing crisis. This is a very positive start.

“The Chancellor’s commitment to switch to a ‘presumption in favour of sustainable development’ based planning system, where the default answer is ‘yes’, is also a positive statement of intent.

“If the Government is to meet its commitment to increase housing supply, more permissioned land must be made available.”

House builders still believe that further action on reducing regulation is required, to supplement announcements today that the Minister will write to Local Authorities with regards to Section 106 ‘infrastructure tariff’ payments if more potential housebuilding sites are to become viable.

Dr Neil Bentley, CBI Deputy Director-General, said: “In the short-term, the Firstbuy Direct initiative will inject much needed confidence into the housing market and create new house-building jobs.

“However, funding for the scheme only runs until the end of next year and in the longer-term we need an approach which meets our growing housing needs.”