A £50 billion bailout of the banks was Alistair Darling's first big idea to mend the housing market's woes. But, in return for this bounty, the banks have not made mortgages more plentiful, and so the Chancellor must look elsewhere.

For most people, falling house prices remain the most obvious and alarming sign of the economic downturn, which puts Mr Darling under particular pressure to provide solutions if his Northern Rock-sullied reputation is to be salvaged.

Now it seems that he is set to place his confidence - which has been betrayed by those grasping, churlish bankers - on local authorities and housing associations, those not-for-profit bodies that nowadays control most social housing. These organisations would buy up unsold properties and keep families facing repossession in their homes by offering them mortgage rescue schemes.

This latest strategy highlights the increasing influence of Vince Cable, the Liberal Democrats' Treasury spokesman, a man as deft at articulating the concerns of Middle Britain as he is at the paso doble in the ballroom. Maybe Mr Darling should study the forthcoming series of Strictly Come Dancing for tips.

It is unlikely that Mr Darling would ever admit that the MP for Twickenham was a guiding voice. But it is significant that, just two days ago, Mr Cable gave his support to the mortgage rescue scheme strategy outlined by the Council for Mortgage Lenders (CML). He immediately appeared to be in touch with the plight of homeowners buckling under the burden of their borrowings. To date, Mr Darling has not succeeed in convincing us of his caring credentials.

Under the CML's proposals, a local authority or housing association would acquire a share in the property of a person about to succumb to home-loan arrears, giving that individual breathing space in which to tackle his debts and to repair his relationship with his lender.

Similar arrangements are provided by some private sector “sale-and-leaseback” schemes but, in some of those cases, the homeowner can still lose his property. The activities of a few rogue operators in this unregulated industry threaten to become the next financial scandal - another reason why Mr Darling may be persuaded that the public sector needs to intervene. He cannot risk a role in yet another debacle.

The effectiveness of this latest plan to stabilise and reinvigorate the housing market will depend on the amount invested: the more, the better. But therein lies the trouble. Taxpayers, who have footed the bill for the bank bailout and will now be forced to underwrite the help for those facing repossession, could be highly aggrieved if Mr Darling is seen to be encouraging profligacy.

He must ensure that feckless homeowners who fail to make their mortgage payments their priority are not rewarded with government largesse doled out by town halls.

Historic homes

1930
Act of Parliament encourages councils to demolish slums and replace them with new homes

1942
Beveridge report lays foundation for huge expansion of inner-city council housing until late 1960s

1980
Housing Act introduces right to buy for tenants

1986
Law allows transfer of housing stock to independent associations and social landlords

1996
Legislation passed to register social landlords

Sources: Tenant Participation Advisory Service; Kensington & Chelsea council