The Conservatives promised today to more than double the initial stamp duty threshold to £250,000 if they win the general election, freeing half a million home buyers a year from the levy, including the vast majority of first-time purchasers.

The tax-cut pledge, costing £1 billion a year, is the last of three by the Tories that have been drip-fed to voters over the past week. They include a £1.3 billion cut in council tax for pensioners and a £1.7 billion boost to encourage pension savings.

The Conservatives portray stamp duty as one of Labour's "stealth taxes" and claim that the amount of money raised from stamp duty on residential property since 1997 has risen from £675 million to £3.79 billion and this had put "an increasingly unfair burden" on homebuyers.

In his pre-election Budget, Gordon Brown, the Chancellor, raised the lowest threshold from £60,000 to the current £120,000. A Tory government would raise that to £250,000, meaning that 80 per cent of home purchases would attract no stamp duty at all.

Announcing the latest pledge, Michael Howard, the Conservative leader, said that in England and Wales the average homebuyer would see their bill cut by £1,800, while average homes in every region in Scotland would be free of stamp duty.

He said the cut would help first-timers get a foot and on the property ladder and make it easier for young couples staring a family to buy a bigger home.

"Six years ago you paid £900 on the average house in England and Wales. Under Mr Blair it’s risen to £1,800," Mr Howard said.

"With a Conservative government, it will be zero.Mr Blair is spending your money so quickly and so wastefully that he needs to take more and more of it. In contrast, Conservatives will cut all the waste that Labour won’t."

The Conservatives also announced today that the stamp duty threshold for commercial property will be increased - from £150,000 to £250,000.

But the political nature of the move - designed to appeal to as many voters as possible - is highlighted by the fact that the Conservatives do not plan to increase thresholds higher up the ladder.

Above the proposed £250,000 threshold, stamp duty would still kick in at 3 per cent of the total cost, so millions of traditional Tory voters in the South would not benefit from the tax-cut at all.

"We thought that it was important to help first-time buyers," a party spokesman said.

Labour has already said that the Tory plans do not add up. A Labour spokesman said: "These are tax cuts they simply cannot fund. The public know you cannot cut taxes and increase spending at the same time with the same money.

"In addition to spending cuts, tax cuts and reduced borrowing, the Conservatives had £15 billion of spending commitments outstanding. This is a recipe for just another Tory economic disaster," the spokesman said.

The Conservatives say that they can save £35 billion a year by cuts to civil service expenditure and reduce government spending by £12 billion compared to projected levels under a third-term Labour government.

Oliver Letwin, the Shadow Chancellor, says two-thirds of that would be spent on reducing official debt, with the remainder used for tax cuts. A Conservative government would announce the tax cuts in a Budget immediately after the election but the cuts would not come into force for a year.

Defending his party's spending plans, Mr Howard pointed to a front-page story in this morning's Financial Times in which economists and business leaders suggested that Labour would have to raise business taxes in its third term because of an expected shortfall in funding.

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