It marks the latest attempt by ministers to draw a line under what has blown up into a significant scandal, partly due to blunders that critics say were avoidable. 

Tory MPs had complained of “shocking incompetence” after former housing secretary Robert Jenrick proposed a scheme that would have required people living in buildings less than 18 metres high to take out loans to pay for remedial work.

Campaigners cautiously welcomed the new proposals but warned leaseholders would remain in limbo while delays to remediation works dragged on, while questions remain about how other fire risks uncovered by safety checks will be dealt with. 

Liam Spender, spokesman for End Our Cladding Scandal, said: “It’s a promising development – we’re glad Michael Gove seems to be taking the issue seriously. 

“However, much of the detail will be critical to any attempt to end the cladding crisis. We’ve twice been here before with new funding announcements. Leaseholders won’t know what’s happening until their building is assessed.”

Sebastian O’Kelly, spokesman for the Leasehold Knowledge Partnership, added: “On the face of it, this looks like a huge win for leaseholders.

“By constructing buildings with fundamental fire safety failings, the building industry failed their customers and the wider public. So we would applaud the Government saying they should pay for it.”

Following the Grenfell Tower fire, in which 72 people died, hundreds of thousands of homes were discovered to have been built using similarly unsafe cladding. 

In a bid to restore confidence, new regulations were introduced by the Royal Institute of Chartered Surveyors requiring new fire safety checks on external walls for properties of 18 metres or higher.

This rendered swathes of flats that did not pass the tests unsaleable as banks refused to offer mortgages or remortgages for them.

To put them right, leaseholders have faced average costs of £40,000 each and some more than £100,000.

Officials under former housing secretary Robert Jenrick were later accused of pouring fuel on the fire in 2020 by issuing further guidance recommending the tests were carried out on all buildings, dragging even more homeowners into the scandal.

Meanwhile, a shortage of engineers to do the checks has left millions of flat owners in limbo, with experts warning it is gumming up the housing market.

Attempts to resolve the thorny issue have so far fallen flat, with lenders and surveyors ignoring new advice from the Government. Any new mechanism to get developers to cover the cost is likely to be closely scrutinised and the subject of heavy lobbying. Previously, the industry has warned a scheme will be difficult to design because many unsafe flats properties were built by small developers that no longer exist.

Mr Gove has previously signalled the loan scheme for leaseholders would be scrapped, telling MPs he was “unhappy with the principle of leaseholders having to pay at all”.

However, a building industry source warned that further attempts to wring more money out of developers – after a £2bn cladding tax was already announced – could backfire and slow down housing delivery.

A government spokesman said: “We won’t comment on speculation.”