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A new shared equity scheme for first-time buyers has been called as a "shot in the arm" for the housing market.

At least 10,000 first-time buyers will be eligible for the Firstbuy scheme, announced by Chancellor George Osborne.

The House Builders Federation welcomed the move and said it would have economic and social benefits.

However, the £250m government pledge to the scheme will only last for one year, the Budget documents reveal, and lenders described the help as "modest".

This would be funded by the levy on banks, Mr Osborne said. Some £210m will be spent in England, with the other £40m in Wales, Scotland and Northern Ireland.

First-time buyers have been struggling to get a foot on the housing ladder.

The latest figures from the Financial Services Authority (FSA) showed that they required a large deposit.

The City regulator said that only just over 2% of new mortgage lending in the final three months of 2010 was to those who could offer a small deposit of less than 10% of a home's value.

Lenders have said this has been the result of a squeeze on the amounts available to lend, and a lack of appetite from new borrowers.

Figures from the British Bankers' Association (BBA) said the number of new mortgages its members had approved for homebuyers stood at 29,923 in February.

So the new scheme would be limited to just a third of one month's approvals - although first-time buyers are key to getting the property market moving.

The Firstbuy scheme would see the government and house builders offer loan help for first-time buyers purchasing a newly-built home.

Buyers must save a deposit worth 5% of their property's value, with the government and housebuilders putting up 10% each through an equity loan, enabling people to qualify for 75% loan-to-value mortgage.

The equity loan would be interest-free for the first five years, with interest charged at 1.75% in year six, and at inflation plus 1% thereafter.

A similar temporary scheme was introduced by the previous Labour government, and was considered a success by house builders.

But the Council of Mortgage Lenders (CML) said the latest scheme was less generous than the previous administration's HomeBuy Direct scheme.

"[We] do not alter our forecast of a challenging year for households and the housing market this year," said Bob Pannell, CML chief economist.

And Toby Ryland, of chartered accountants Blick Rothenberg, said: "This seems to encourage first-time buyers to purchase property with very high loan-to-value ratios.

"This is a bold strategy given that the credit crunch was largely caused by people borrowing more than they can afford to repay. We must hope that there are sufficient safeguards in place to protect against repeating the mistakes of the past."

In a separate announcement, the Support for Mortgage Interest scheme, which is aimed at subsidising the interest payments of mortgage holders across the UK who become unemployed, will be extended for another year from January.