The letter from Simon Clarke, the Chief Secretary to the Treasury, to Mr Gove said loans for smaller buildings would be replaced by a “limited grant scheme”.

“You may use a high-level ‘threat’ of tax or legal solutions in discussions with developers as a means to obtaining voluntary contributions from them,” it read.

“I am pleased to see that you acknowledge the principle that the taxpayer should not be on the hook for further costs of remediation. To reiterate, my approval of this new package for 11-18m buildings is therefore conditional on no further Exchequer funding.”

Sir Peter Bottomley, a senior Tory MP who co-chairs the All-Party Parliamentary Group on Leasehold and Commonhold Reform, urged the Government to go further.

‘It’s not enough’

He told BBC Radio 4’s Today programme: “From what we’re hearing, progress is being made – it’s not enough.”

Sir Peter said “we need to get the money, spend it properly, and we need to overcome the hurdle” of indemnity funding so landlords can make claims from developers and manufacturers.

He said the Government must tell insurance companies to “come to the table with, say, £8 billion and then innocent leaseholders will live in homes which are safe and saleable”.

Matthew Pennycook, Labour’s shadow housing minister, said: “Any new measures that help resolve the building safety crisis are welcome, but on the face of it these appear far less significant than they sound.

“Nothing on non-cladding defects, no new developer levy and the position on leaseholder liability unchanged. We await further detail.”