Gordon Brown has accepted the core recommendations of the Barker review of the UK's housing sector - including a possible windfall tax on profits from land sold for development.

Delivering his Budget, the chancellor said the majority of the recommendations would be accepted in full.

The government has accepted senior economists Kate Barker's recommendations for British real estate investment trusts to improve the supply of rented property.

It also backs the release of more public sector land and supports moves to create a single body responsible for housing and planning.

Brown also pledged to consult on plans to levy a "windfall tax" on those who profit from the sale of land for property development.

Barker

In a review of housing supply, Barker said landowners were making gains as a result of residential planning permission being granted.

Her study said the government could levy a tax on these profits to extend funding for affordable housing.

The review was ordered by chancellor Gordon Brown and the deputy prime minister John Prescott as part of plans to tackle the country's social housing shortage.

The study concludes that 100,000 new homes will be needed each year to ensure supply keeps up with demand.

And it calls for an overhaul of the planning system to ensure it is more responsive to changes in demand.

Launching her report, Barker said: "I believe that continuing at the current rate of house building is not a realistic option, unless we are prepared to accept increasing problems of homelessness, declining affordability and social division, decline in standards of public service delivery and increasing costs of doing business in the UK - holding back our economic success."

Increase supply

The study concludes that an increase in supply of social housing of 17,000 homes each year is required to meet newly arising need in the South East alone.

Barker says the government should express its objectives for the property market through establishing a goal for affordability of market housing, with the aim of improving access to over the housing market cycle.

The report recommends a number of reforms to the planning system - including the merger of  regional planning and housing boards and the creation of new regional planning executives.

It also calls for a "Community Infrastructure Fund" of £100-200 million to be created to overcome infrastructure blockages and facilitate development.

"Creating a more flexible housing market is a considerable challenge that will require concerted action by all players: government at national, regional and local level, the building industry, and those engaged in social housing provision," Barker said.

The chancellor said Prescott would now examine how the government can increase the supply and affordability of housing.

But he said the government would "strike the right balance" between the economic and social case for development and environmental and housing needs.