Alistair Darling, the Chancellor of the Exchequer, today announced that the government is to increase funding for third party debt advice groups.

The money will be spent on existing debt advice charities, like the Citizens Advice Bureau, and on the provision of free legal services to people who have been the subject of  repossession orders.

In a statement, Darling said "It is clear from speaking to consumer groups and the mortgage industry that borrowers may be concerned about the impact of the current market conditions on their mortgages.

"That is why it is vital that the Government, working with the industry, offers as much support as possible both directly to those people and to the consumer advice groups who can help them in their day-to-day lives." He added.

Against a backdrop of growing fear about falling prices, negative equity and increasing repossessions, the government's hand has been forced, according to Roy Berry of The Mortgage Provider. "People are feeling the squeeze. The government may not be able or willing to intervene directly in the mortgage market, but they can at least make a gesture. And that's what this is- a gesture"

The Citizens Advice Bureau said that they were more worried about aggressive tactics from mortgage lenders: "We have seen a sharp rise in the number of people coming to us with mortgage arrears, and evidence that in too many cases lenders are using court action as a first rather than last resort... we want to see all lenders doing everything in their power to avoid things getting to this stage. This means treating borrowers in arrears fairly and sympathetically, and being willing to negotiate with borrowers in trouble.

"Our evidence shows that all too often this isn't happening, which is why we need a 'pre-action protocol' – measures to ensure only those cases where no agreement is possible end up in court." She added.