The controversial Help to Buy scheme has won the backing of Deputy Prime Minister Nick Clegg, who has dismissed calls by Liberal Democrat colleague Vince Cable to scrap its second phase.
Last week, Cable warned that "mortgage guarantee" part of Help to Buy, which will extend extend the scheme to cover existing properties from January, could create a new housing bubble and should possibly be scrapped.
He subsequently told The Guardian that the scheme, which gives buyers with a 5% deposit a government loan of up to 20% to help them get an affordable mortgage, should be limited to part of the country with depressed property prices, such as parts of the north of England, Midlands and northern Ireland.
But Clegg and colleague Danny Alexander, chief secretary to the Treasury, have joined forces to reject fears of a dangerous housing bubble.
Speaking on the Andrew Marr show, Clegg said: "You can't set a national policy, neither the government nor the Bank of England, based only on what happens in Kensington and Chelsea. You have to think about all the other households."
While backing Cable's call for vigilance, he said we are nowhere near an unsustainable housing bubble, with mortgage approvals half what they were at the peak.
And he defended the second stage of Help to Buy. "We are not talking about encouraging banks to irresponsibly lend at 120% mortgages. We are putting a little bit more air into giving creditworthy customers the ability, not irresponsibly, to borrow money in order to get their feet on the first rung of the property ladder. Clearly in parts of the country, notably central London, the housing market is now marching forward."
Danny Alexander told Sky News: "We are a million miles away from a housing bubble in this country. Right now the problem we face in the housing market is we are not building enough new homes and there are vast numbers of young people in work who could afford the monthly payments on their mortgage but simply can't afford the deposit they need to get a mortgage.
"The whole point of the second phase of the Help to Buy scheme is to help those people fulfil their aspirations and in doing so ensure there is more construction activity, that there are more new homes being built."
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