An announcement is expected "quite shortly" from the deputy prime minister on plans to curb the rights of council tenants to buy their properties.

The right-to-buy scheme, a flagship policy of Margaret Thatcher's government, is cited as a reason for the shortage of low-cost homes, making it difficult for workers in the public services to enter the property market. The scheme has also faced problems as tenants buy their homes at a discounted price, only to sell them to a property company that sells them at a greater profit.

Under the proposed changes, local authorities in areas with acute housing shortages, such as those in the South East, will be able to limit the discount offered to tenants at £20,000.

It was housing minister Lord Rooker who first announced that the government was re-examining the scheme during a Labour party rural conference in Shropshire last year.

"We the Labour party lost millions of votes over it. It was a piece of social engineering that Thatcher could see a great advantage from and to the extent that we have gone along and the policy we obviously feel that it was right," he said.

"The thing that really worries me is that we haven't got the homes in this country and we haven't got the homes in the right place. We need more homes and we need more modern homes. It doesn't matter whether they are privately rented, it doesn't matter whether they are council rented or co-op or owner-occupied."

However, the Conservatives have already criticised the proposals.

"This is stupid and ideological driven response to 'abuses of the system'," argued David Davis, shadow secretary of state for the Office of the Deputy Prime Minister.

"Apart from a few alarmist stories, leaked to the media, these abuses have not been demonstrated firmly as of yet. If such abuses are demonstrated the correct response is not to punish all tenants - thousands of whom simply want to take a first step on the property ladder. The proper way to deal with any abuse is through specific action to eliminate the specific abuses.

"Sadly, this is a case of Labour punishing the many to stop the actions of the few. Far from cutting the right-to-buy, the best way to tackle the lack of affordable housing is to increase it. Labour wants to limit a popular and successful programme, we want to make it even better."