Gordon Brown, the Prime Minister, and Alistair Darling, Chancellor of the Exchequer, have asked the Financial Services Authority (FSA) to review the rules that allow lenders to offer loans worth the entire value of a property, or even more.

Although critics will claim that the Government is acting too late as few, if any, 100% mortgages are available to home buyers now, ministers insist that action must be taken to stave off a future crisis.

Brown said: “We have got to get the balance right between serving home owners better and encouraging responsibility in the housing market. Britain needs to lead the world in reforming and restructuring our banking system.”

Ministers also want to step up the drive to get banks offering “traditional” home loans worth between 75-95% of a property’s value - a market that has been badly hit by the recession.

The “asset protection scheme” will see the taxpayer underwrite bad assets under an open-ended agreement that will potentially cost hundreds of billions of pounds.