Large swathes of protected green belt land could be bulldozed for housing under plans being considered by the Treasury.
Ministers and officials are examining radical proposals to release public land in the green belt to help ease the housing crisis.
Officials believe the scheme could be self-financing, as land can jump in value more than 100-fold if it is re-designated for housing.
Under one proposal, the government would use the increase in the value of the land to pay for new housing and supporting infrastructure.
The Treasury could also try to divert part of the windfall gain currently enjoyed by private developers when they are granted planning permission.
The scheme is being considered for possible inclusion in next month’s Budget and could be discussed at a housing summit due to be convened by Theresa May in Downing Street tomorrow.
Large swathes of green belt land across the UK could be bulldozed and used to build homes, to ease pressure on the housing crisis
But it will face fierce opposition on the Tory benches, with several cabinet ministers bitterly opposed to any move that would weaken protection for the green belt.
Earlier this month, the Prime Minister pledged to dedicate her premiership to tackling the housing crisis.
Senior Tories believe it is their best hope of winning back the support of the under-40s.
Mrs May will host a major housing summit in No 10 tomorrow, with developers, councils and housing associations asked to come up with ideas to boost house building.
England’s 14 designated areas of green belt land cover about one-eighth of the country and were designed to prevent urban sprawl. Despite the name, only part of the land consists of green fields.
The Campaign to Protect Rural England says the green belt ‘provides a breath of fresh air for 30 million people’.
But critics argue that much of the land has little landscape value. Using just a small part of it could release land for hundreds of thousands of new homes close to existing towns and cities.
A study by the government’s former housing tsar Kate Barker found that agricultural land in some parts of the country could rocket by up to 150 times its value if it was granted planning permission for housing.
Chancellor Phillip Hammond (pictured) could include the radical proposal’s in next month’s budget
She called on ministers to find a way to ‘capture’ some of the windfall gain for use by the state.
The idea is one of a string of eye-catching proposals being considered for next month’s Budget.
Ministers are also examining whether to allow local authorities to borrow more money to build a new generation of council houses.
Chancellor Philip Hammond is under pressure to intervene to ease the financial pressure on students, with some ministers calling for existing student debts to be written off and replaced by a graduate tax.
And, in a bid to tackle so-called ‘intergenerational fairness’, Mr Hammond has investigated the possibility of cutting income tax rates for the under-30s to make it easier for young people to save a deposit for a house.
One government source yesterday said the Chancellor wanted to unveil a ‘radical Budget – something that is a big offer to the nation’.
The source added: ‘It means memorable stuff that changes thinking and changes people’s futures.’
Communities Secretary Sajid Javid, who is in charge of housing policy, and Work and Pensions Secretary David Gauke are among those urging the Chancellor to be bold.
However, others are urging caution and warning the Chancellor that he could be out of a job if he makes a mis-step.