Gordon Brown and Alistair Darling today announced a £1.6 billion bid to kick-start the housing market, including a 12-month holiday from stamp duty for homes costing up to £175,000.

The exemption from stamp duty, which begins tomorrow and will cost the Treasury around £600 million, could save buyers up to £1,750 if they sign a deal within the next year.

But critics swiftly condemned the package as inadequate, questioning whe- ther the stamp duty exemption would bring new buyers into the market.

The National Federation of Builders dismissed it as “little more than a political sticking plaster”.

The stamp duty move will be limited because house purchases up to £125,000 are already exempt from the one per cent tax paid on purchases between £125,000 and £250,000.

Telford MP and Treasury ministerial aide David Wright said: “This is a positive move to stimulate the housing market in what we acknowledge are difficult times.

“Stimulating sales at the lower and medium end of the market helps first-time buyers but is important for the whole of the housing market.”

Mr Brown and Communities Secretary Hazel Blears also unveiled details of an aid package worth around £1 billion for first-time home buyers and people struggling to pay their mortgages.

Meanwhile, the Organisation for Economic Cooperation and Development (OECD) today predicted the UK economy will fall into recession during the second half of this year.

The OECD predicted the economy will shrink 0.3 per cent in the third quarter, and by 0.4 per cent in the fourth.