Left MP Michael Meacher warned yesterday that the government's "disastrous" Help to Buy mortgage scheme would spark an artificial housing price boom followed by a collapse.

Prospective home buyers will be enticed to take the plunge into the stormy waters of the housing market with a government-backed offer of 95 per cent mortgages.

"It is utterly contemptible and irresponsible," declared Mr Meacher as Prime Minister David Cameron trumpeted a major extension of the scheme.

The £12 billion scheme has been greeted with suspicion by bankers and some Tory MPs, but several high street banks have now been persuaded to participate, led by those in which the government has a stake.

Natwest, RBS, Halifax and Bank of Scotland will offer the new mortgages from this week, while Virgin Money will join from the new year.

Instead of buyers having to find a deposit of up to 20 per cent of a property's value, they will be offered Help to Buy mortgages with as little as a 5 per cent deposit.

The scheme will apply to homes worth up to £600,000. The government will then guarantee up to 15 per cent of the property's value, in return for a fee from the lender.

Mr Cameron fast-forwarded the launch of the scheme to this week in a Tory conference stunt.

He paraded before media cameras in Northampton yesterday and even entered a Natwest branch to chivvy mortgage staff.

An earlier scheme has been taken up by 15,000 buyers of new homes.

Mr Meacher said the scheme had been "universally condemned, even by people in the City."

He predicted yet another "rapid boom followed by bust."

Labour shadow Treasury minister Chris Leslie said: "If ministers are serious about helping first-time buyers they should bring forward investment to build more affordable homes."

Without more affordable homes, prices would soar and squeeze first-time buyers, he warned.

TUC general secretary Frances O'Grady commented: "This is not so much Help to Buy as Help to Sell - even for those selling £600,000 properties beyond the dreams of most first-time buyers."

The cross-party Treasury select committee warned that the scheme could "distort the housing market or carry threats to financial stability."