Ministers faced accusations last night of penalising the needy as they sounded the death knell for the days of an automatic council house for life.
New council and housing association tenants will be offered fixed-tenancy agreements for as little as two years, starting in 2011. They could be evicted after that period if their income increases.
Grant Shapps, the Housing minister, said he expected future contracts of a "significant length" – between five and 20 years – to be the norm under the new system, but that the minimum agreement could be two years. The eight million existing social tenants will not be affected by the moves. New tenants will have the right to pass on their home to a spouse or partner upon their death, but not to other relatives.
Under detailed plans published yesterday, councils and housing associations would be able to charge rent of up to 80 per cent of the market rate for their homes to enable them to raise more cash to build or acquire more properties.
Mr Shapps said the "out-of-date" current approach to housing tenancies had seen waiting lists rocket and was unfair to families who genuinely needed social homes. "They trap existing tenants in poverty, often in homes that aren't suitable for them."
But the homeless charity Shelter said that the new rules would do little to tackle Britain's housing crisis, in which people were losing their homes every two minutes.