Ruth Kelly has had to revise a scheme that helps poorer families to get a foothold on the property ladder after only 250 people applied to take part.

Under the initiative, people in social housing can take out a mortgage covering at least 25 per cent of the equity while paying rent for the remainder. As their income rises, they can take out a larger share until they own the property.

The Communities and Local Government Secretary admitted that the 25 per cent threshold was too high for some families, and announced plans to lower it to 10 per cent.

“The problem is, what happens to those who are unable to get a foot on the bottom of the property ladder? They do not share in the wealth generated by rising prices. And they will find it harder to help their children benefit from ownership,” she said in a speech to the Fabian Society.

“It’s early days, and we will need to learn the lessons. But I see it as us dipping a toe in the water. We need to ask whether what we’re offering is flexible and ambitious enough.”

Officials at Ms Kelly’s department said that 23 sales had been completed since the Social Home Buy Scheme started last year and that a further 250 applications had been submitted.

The homeless charity Shelter urged the Government to provide more social housing, rather than right-to-buy schemes. It estimates that only 5.5 per cent of all families in social housing have a gross annual income of £30,000, the amount needed to take advantage of the scheme.

Adam Sampson, Shelter’s chief executive, said: “If this is a measure to address housing, then I think it is at best relatively irrelevant to the housing crisis and at worst could well exacerbate it. One in seven children in Britain today is trapped by homelessness or bad housing and council housing waiting lists have doubled since 1997 to 1.6 million.

“Unless the money raised by this scheme is ploughed back into building desperately needed new social homes, it will only serve to exacerbate the existing housing crisis.”

A spokesman for the Communities Department attributed the poor take-up to the small number of housing associations that had so far taken part and because the scheme had been operating for less than a year. He said that the scheme was aimed at 1.7 million of the 3.5 million social housing tenants.

Michael Gove, the opposition housing spokesman, said: “David Cameron outlined proposals last year to give all social tenants the chance to own all or part of their homes. Now seven months later, Ruth Kelly is trying to follow his lead.”