The government's Help to Buy scheme is facing the axe amid concerns it is helping wealthier households and pushing up house prices.

The Telegraph understands that ministers are planning a “fundamental review” of the policy that could see it replaced with a scheme that is "more targeted on those it is meant to be helping."

New research published last week showed that one in five households on Help to Buy have used it to upgrade their homes rather than to get onto the housing ladder.

The disclosure comes as the government faces pressure from developers and mortgage lenders to set out plans to finance the policy beyond 2021, when the current tranche of funding ends.

However, ministers are believed to be weighing up a temporary extension, possibly of a restricted version of the scheme, to avoid the "disruption" that could be caused by bringing it to an end with only three years' notice for developers.

A temporary extension of the scheme would likely take it beyond the 2022 election.