Many people hit by the downturn will be able to defer part of their mortgage interest payments for up to two years under plans unveiled by Gordon Brown.

The plan is designed to give those who lose their jobs or suffer a big cut in income extended breathing space if they are facing repossession.

The scheme will cover mortgages worth up to £400,000, the BBC understands.

The lender and homeowner will agree on the proportion of payment to be deferred, but it could be up to 100%.

Mr Brown made the announcement during a House of Commons debate on the Queen’s Speech, which took place earlier.

The prime minister told MPs the eight major mortgage lenders had signed up to the plan, which will start early in the new year and is meant to cut the risk of homes being repossessed.

It comes amid predictions repossession numbers could rise to 75,000 next year.

The full details of the scheme have yet to emerge, but it is understood the government will underwrite interest payments, which will then have to be repaid in full at a date to be agreed with the lender.

The scheme could help a two-income family where one earner has become redundant, a homeowner who has suffered a significant loss of overtime or people who have had to take a lower-paid job, Downing Street said.

People could also convert a repayment mortgage into an interest-only loan to take advantage of the scheme, Mr Brown’s official spokesman said.

The plan is designed to boost the wider economy, with a government source describing repossession as “a small risk of something disastrous happening to you” which had a major effect on confidence.

Looks like the Brits are way ahead of the curve on helping its people, the US still is working on the premise that if Goldman survives then all is well.  Sorry to tell them, Irene, they are smoking crack.  Letg me see if I have this about right, Goldman is using the money to buy other companies and the Brits are helping their “Main Street”.  You decide which is working for the people that put them in office.