The government has rejected claims that it is set to scrap council tenants' right to buy in property hotspots.

In what is being described as a dramatic reversal in policy, reports suggested that the right to buy scheme is to be suspended in areas such as London, Leeds and York as early as this autumn.

Downing Street said there were "no plans" to scrap the scheme, but warned that it was examining proposals to "tackle abuse" within the system.

"Where rules are being exploited it would be negligent of the government if it wasn't looking at how we could curb any abuse," said a spokesman for the prime minister.

"But there is a world of difference between curbing any abuse and ending the scheme."

The government says it wants to end cases where tenants buy properties in estates set for demolition for sums as low as £40,000 who then go on to sell their home back to the council for up to three times the amount.

But critics say the government's proposals, to be unveiled by John Prescott in the autumn, could be used as the thin end of the wedge to effectively end right to buy schemes in areas where there is a shortage of affordable rental accommodation.

David Davis, the shadow local government secretary, said Prescott was "pursuing ideological vendettas" against council tenants seeking to buy their own home.

"Once again Labour have failed to be honest with people. Their manifesto promised not to abolish the right to buy, but this has now become another broken promise in pursuit of a flawed policy," he said.

"Abolishing the right to buy will do nothing to free up existing housing stock. Indeed, it will only make the problem worse as people will become stuck in social housing, unable to get their first step on the housing ladder.

"It is no good proposing to abolish the right of thousands of people to own their own homes without having a clear alternative to put in its place."