David Cameron will try to breathe new life into the right-to-buy scheme by offering council tenants discounts of up to £75,000, arguing that the discount will help encourage "strong families and stable communities".

Families could receive a 35% discount after five years' residency, with an extra 1% for each additional year, up to a maximum of £75,000. It had previously been expected that the maximum would be set at £50,000.

Tenants in flats will get 50% off after five years, with 2% added yearly. The money raised from sales will go towards building more social housing.

The government is also announcing more details of its newbuy guarantee, designed to give would-be buyers access to mortgages even if they only have a 5% deposit. Names will be released of three high-street lenders and seven construction firms who have agreed to support the scheme.

Ministers say they believe the initiative will help 100,000 people who would otherwise have been frozen out of the property market, and will support 50,000 construction jobs. Developers would contribute 3.5% of the purchase price while the government guarantees 5.5%. The scheme is available on flats and houses up to a maximum value of £500,000 in England only.

Cameron said: "Strong families and stable communities are built from good homes. That's why I want us to build more homes and I want more people to have the chance to own their own home.

"We are acting today across the board to make this happen. We're rebooting the right-to-buy scheme to increase discounts for two million tenants in social housing in England. And we're delivering on our promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly built home.

"It's no good hoping people will climb the property ladder if the bottom rung is missing. Affordable properties and available mortgages are vital. So we're working with leading housebuilders and lenders to get the scheme under way."

The shadow housing minister, Jack Dromey, dismissed the announcement as "too little too late – but at least it is something from a government that has done virtually nothing to tackle the worst housing crisis in a generation". He said the number of major lenders participating in the scheme had fallen from seven to three and the number of builders from 25 to seven, compared with when the scheme was originally announced.

The newbuy scheme has been designed by the Home Builders Federation and the Council of Mortgage Lenders.