Gordon Brown attempted to revive the flagging housing market - and his own political fortunes - yesterday with a £1.6 billion rescue package that included a surprise suspension of stamp duty, but experts said the move was merely “sticking plaster” and some even thought it could make things worse.

The centrepiece of the Prime Minister's fightback was a year-long tax exemption cutting 1 per cent, or as much as £1,750, off the price of houses worth up to £175,000.

But the announcement, which Mr Brown had desperately tried to keep under wraps for maximum impact, backfired after Alistair Darling, the Chancellor, refused to say how the Government would finance the £600million cost of the cut. The Chancellor, still suffering a backlash from his comments at the weekend that Britain faced its toughest economic period in 60 years, said further details would be provided in his Pre-Budget Report later in the autumn.

George Osborne, the Shadow Chancellor, said: “They've had months to prepare and on the day it's launched, they can't even tell us how much it costs, or where the money's coming from.”

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Industry figures said that suspension of the stamp duty tax signalled that Government had at last woken up to the problems facing the housing sector, but most said it would do little to help the overall mortgage funding market, which has virtually ground to a halt since the onset of the credit crunch last summer.

“Until problems in the mortgage market are resolved these kinds of measures are just sticking plasters,” said Alex O'Connor, the head of London real estate at the law firm McGrigors. “Until mortgage flow increases, I can't see the situation improving.”

His comments were echoed by housing experts across the board, who said that waiving the stamp duty tax would have a limited effect, particularly for first-time buyers in London, where the average price of a home is close to £348,000. Sue Anderson, a spokeswoman for the Council of Mortgage Lenders (CML), said: “It is questionable whether it will incentivise buyers who wouldn't have entered the market anyway.”

Rightmove, the property website, said buyers in the North, where 63 per cent of properties will now avoid the 1 per cent stamp duty, stood to benefit the most. But it gave warning of the creation of a new “dead zone” in the £175,000 to £200,000 bracket, where sellers would come under pressure from potential buyers to reduce their prices further so that they could avoid paying stamp duty.

The stamp duty suspension was one part of a package of measures designed to help homeowners. As expected, Mr Brown also promised £200 million to help 6,000 vulnerable families facing repossession, although the number was dismissed as a drop in the ocean compared with the 45,000 families that the CML predicts will be made homeless by the end of the year.

A total of £300 million was made available to help 10,000 first-time buyers get a foot on the property ladder, but buyers were told that the deal was open only to those earning less than £60,000 and would apply only to new-build homes unsold by struggling housebuilders. A further £400 million was promised to boost the number of social homes by 5,500 within the next 18 months.

George Buckley, chief UK economist at Deutsche Bank, said the stamp duty measure was helpful but the underlying deterioration in the housing market would negate its effect very quickly. He cited Nationwide figures that showed property prices fell by 1.9 per cent in August, knocking about £3,000 off the value of a typical £150,000 home. “Any tax savings accruing to the buyer would be more than wiped out in just a single month if prices were to fall at the same rate,” he said.

Mr Darling, who did not accompany the Prime Minister on a visit to a first-time buyer in Ealing, West London, said the decision to waive stamp duty would give those struggling to get a foot on the property ladder “a little bit more help”.

“I think it will help,” the Chancellor told the BBC Radio 4's World at One. “It is one of a range of measures. If you look at the totality of what was announced this morning I think all that together will make a difference.”

But he conceded there were “still further things we need to do”.

CASE STUDIES: 'Why should housebuilding stop if we have this option'

The developers

Stonehurst Estates, a private developer, is best known for bespoke projects such as a striking £3 million glass, steel and copper house in Kensington Church Street, West London, and the conversion of Temple Grove, a 30-acre estate in East Sussex, into lavish apartments.

The London-based company has increasingly found itself signing deals with housing associations and other social landlords, who use government funds to buy privately built homes. Ministers are to speed up the release of money promised to housing associations to allow them to buy stock that is languishing unsold on developers' books.

Clive Lynton, development director of Stonehurst, said: “Why should the housebuilding industry stop, when this is an option?”

The first-time buyer

George Caldeira, 29, works in system support for Euro MTS, a financial trading company, and is hunting for a one-bedroom flat in Ealing, West London, on a budget of £200,000.

He is disappointed with the raising of the stamp duty threshold to £175,000 for 12 months.“£175,000 will not buy you a flat in a half-decent part of London,” he said. “I think the 1 per cent threshold should have been raised to £250,000.”

The Halifax says that the average property in London costs £291,533.

“I thought by my age with a decent job and salary I would be OK, but it's very hard,” Mr Caldeira added.

The family

Paying the mortgage on a three-bedroom semi in Somerset has been a challenge for Naomi and Geoff Stevens ever since Mrs Stevens, 26, was made redundant from her job as a veterinary nurse.

The couple remortgaged their home three years ago, and have £45,000 of unsecured debt to help to meet repayments and the cost of bringing up two children. Their home's value has fallen to £10,000 below the level of their mortgage. “We are trying to stay put to sort it out,” Mrs Stevens said. She is looking for work in hotels; her husband, a football coach, works overtime. She welcomed the action on repossessions, but feared that it would not help them: “I wouldn't want a loan from the council - it's just more to pay back.”

The single person

Tim Bennett, 39, was delighted with the announcement on the freeze on stamp duty for properties up to £175,000. Mr Bennett had his £165,000 offer on a one-bedroom flat in Merrow, Guildford, accepted this week and he was prepared to pay £1,600 in stamp duty. “It's freed up the money for other things, such as furniture,” he said. He joined the shared-equity scheme OwnHome, run by Places for People in Preston.

“I have a mortgage agreed for £132,000 and the housing association are providing the difference with an equity loan,” he said.