The parties in the coalition government are at loggerheads over the future of council house sell-offs on the eve of the 30th anniversary of Margaret Thatcher's "right to buy" scheme.

The Liberal Democrat deputy leader, Simon Hughes, says coalition plans to give councils more power should include issues like right to buy. The Bermondsey MP said: "A local housing authority should be free to say they are not going to grant the right to buy. I represent a constituency with more council tenants than anywhere else in England. We have lost thousands of homes and we cannot afford to lose more."

The Scottish parliament has already ended right to buy and the Welsh Assembly is phasing out the policy.

But the Conservative housing minister, Grant Shapps, has dismissed speculation that the right to buy policy in England, which came into effect in October 1980, would even be reviewed, let alone scrapped. He has described press comment that changes were being considered as "completely untrue" on Twitter, and is reported to have denied the claims again at a fringe meeting at the Liberal Democrats party conference yesterday.

The row comes as figures show the dramatic impact of right to buy on British housing stock. Since 1980, councils have sold off almost 50% of their 5m flats and houses – typically those in the best conditions and most popular off-estate locations. This brought in more than £85bn, most of which went to central government because of restrictions on councils using the money for local projects.

The policy was pivotal in pushing levels of owner-occupation in Britain up from 57% in 1980 to just under 70% today, despite a rise in the number of separate households from about 20m then to 25m now.

In 1980 a third of all British households lived in council flats and houses – now it is just 12% with an additional 7% in other forms of social housing, mostly run by housing associations. In that same year the average price of a council property bought by a tenant was £15,528, thanks to extraordinarily generous discounts offered by Thatcher's government to long-term tenants who wanted to buy. Scottish tenants enjoyed the largest discount (an average of 55%) while north-east England and Yorkshire were the regions with the lowest average discount, and even in those areas it was 44%.

There were side-effects in the private housing sector too. The number of craft apprenticeships for plumbers, carpenters and plasterers plummeted as council direct labour organisations folded when right to buy reduced public sector housing stocks. Private house builders, who often cherry-picked skilled craftsmen from council work forces, say their increased use of skilled migrant workers has been a direct consequence of the shortage of UK apprentices.

Aside from creating what Thatcher called "a property-owning democracy", right to buy was also supposed to integrate council housing into the wider property stock.

Tenant-buyers were expected to sell their home and buy in the mainstream property market, in their existing area or elsewhere, about every seven to 10 years, as happens in the market for private flats and houses. But this has not happened.

A study by Maarten van Ham of the Centre for Housing Research at the University of St Andrews shows that right to buy owners rarely move and, because their neighbourhoods are no longer council-owned and managed, they suffer worse problems than before.

"The right to buy has given many households access to home ownership but not to better places. The buyers were social renters to begin with, and for a reason. They have less money than most people, find it harder to get a mortgage and now cannot attract buyers for ex-council homes which are unpopular," van Ham says.

"The buyers are now trapped. They have too little money to improve their properties and are unhappy where they live. In a downturn this sector – the poorest – is hit badly. Many struggle to even keep their homes from repossession," he adds.

'We regret buying'

Charles and Margaret Okwalinga are a case in point. They arrived in the UK from Uganda in 1999 and rented a three-bed council house in Lewisham, south London, from 2000. Three years later they bought it, putting down a £15,000 deposit and agreeing a mortgage of £165,000.

"We thought owning a home would give us stability and control and make us part of a community. The long-term plan was that eventually we would move and get a better home. It hasn't turned out that way," Charles says.

Their short period as UK residents meant the couple had a poor credit rating so were obliged to use a sub-prime mortgage lender, which charged an interest rate of 9.8%.

By 2007 their monthly payments hit £1,500. Their business – a small restaurant in Hackney, north-east London – was then hit by the credit crunch, sharply reducing their income, and the couple racked up £6,000 arrears in 2008.

"We have survived, but only just. The low base rate and an arrangement with our lender means we are now paying £500 a month on an interest-only basis. We can just about manage but we'll be in trouble again if interest rates rise this year or next," Charles says.

"We now look back at others who were tenants with us and we see that they have a level of lifetime security. We are still at risk of repossession and homelessness at any time," he adds.

"Right to buy might have worked for some people, but for many like us it was just too much of a risk. We regret it."