Millions of council tenants would be allowed to buy their homes at half price under government plans to extend the right-to-buy.

The discount, double that currently available, is part of the government's long-awaited, and much delayed, housing strategy paper, due to be published on Monday.

The average saving for council tenants buying their home would increase from £26,000 to £52,000. In London and the south-east, where property prices are highest, the discount could rise from £38,000 to £76,000.

Other measures in the package, which is aimed at reviving the housing market and solving the UK homes shortage, include restoring rules allowing first-time buyers to be able to apply for 95% mortgages, similar to those available at the height of the property boom five years ago, according to the Times.

Ministers regard a boost to housebuilding as one of the best ways of securing economic growth. But Labour said that increasing the discount available to the right-to-buy would not solve the housing crisis.

Shadow housing minister Jack Dromey said: "There is a growing housing crisis. The Tory-led government said building more homes would be the gold standard by which they should be judged. But fewer homes are being built this year than for a generation. They are failing their own test and these announcements won't change that or help to build more homes."

A Downing Street spokesman said: "It is all just speculation. The housing strategy will be published next week."

David Cameron is also to announce plans to build as many as 450,000 mainly affordable homes between now and 2015.

The prime minister is expected to give details of how state-owned brownfield sites will be released for construction.

He is also expected to support plans, backed by the Confederation of British Industry, for a government-backed mortgage indemnity scheme for first-time buyers.

Under the mortgage indemnity scheme the government would cover the risk for the lender, which should enable first-time buyers to take out larger mortgages relative to the value of the home.

The plans also propose that borrowers should be able to use money in their pension pots to boost deposits. The Scottish government launched a similar scheme this year to help first-time buyers.

Average housing deposits are £37,375, representing 17% of the overall property value. A recent survey by Santander found that one-third of non-homeowners believed they would never be able to afford a property. Four out of five under-30s cannot afford to buy a home without help from their parents.

The number of new homes built has fallen dramatically in the past five years. In 2010, the latest full year for which figures are available and the year in which the coalition government came to power, this trend continued, with just 102,730 homes built – down more than 15,000 from the previous year.