The biggest overhaul of affordable housing since the Thatcher right-to-buy legislation is set to be announced by the chancellor.

In a bid to curb spiralling property prices, Gordon Brown will announce in the comprehensive spending revue that he is to double the £1 billion for the Housing Corporation which gives money to housing associations.

The aim will be to provide homes for the so-called "key workers" such as police, teachers and nurses currently locked out by the overheated property market.

Following the chancellor's announcement, deputy prime minister John Prescott will announce plans to expand house building in four key areas of the South East outside the green belt - including Ashford in Kent and Stansted in Essex.

"The massive rise in house prices has caused us very real difficulties," said Prescott.

"The situation is affecting the whole quality of life because of its impact on public sector workers. We have got to do something much more effective than subsidising house prices as in the past."

The Council for the Protection of Rural England has backed the plan as long it uses land that is not designated as a Greenfield site.

Also on the cards is the abolition of universal child benefit.

Instead the system of educational maintenance allowances will be expanded to focus on children from poorer backgrounds.

Education secretary Estelle Morris will get an extra £600 million to fund the scheme.