Banks face blitz over repossessions

The Chief Secretary to the Treasury is said to be working with the Ministry of Justice on tightening requirements on lenders seeking repossession orders in the courts.

"We need a more responsible approach to repossessions," she told The Observer. "What we are looking at is something looking much more widely at all of the banks because I think repossession needs to be a lot rarer.

"We need to do everything that we can to keep people in their own homes."

The Council of Mortgage Lenders is predicting that 45,000 properties will be repossessed this year - up from 26,200 last year.

Ms Cooper suggested there was no way of avoiding "tougher times ahead", saying that the global nature of the slowdown was beyond the powers of governments to prevent.

But she added: "What we can do is step in and, by dealing with the problems in the banking system, prevent the worst of the credit squeeze hitting people."

The Government has been under pressure to curb state-owned Northern Rock's so-called "aggressive" repossession tactics.

Of the 19,000 homes repossessed in the first half of this year, about 4,000 were by Northern Rock.

On Friday, the charity Credit Action urged the Treasury to put pressure on Northern Rock to adopt a more flexible approach towards borrowers who fall behind on their mortgage payments.