Ministers are planning to 'privatise' much of local authority housing in Britain and to extend rent-to-buy schemes to tenants nationwide.
The proposals, to be outlined in a housing green paper early next year, will allow councils to sell estates to property management companies in return for billions of pounds of extra cash.
Three options are being considered: The first is 'mortgaging' council estates to private property companies which, in return for buying stock and taking on responsibilities for repairs, will have the right to collect rent.
The third option involves introducing buy-to-rent schemes and extending the right to buy across entire council estates to remove them completely from council control.
But privately, ministers fear that the change will cause more of an outcry within the Labour Party than moves to cut disability benefit.
However, they hope the prospect of up to£9bn of extra cash from government and private funds will 'sweeten the pill'.
A senior Labour source said: 'This is a very sensitive area and we are going to have to get around opposition from our councillors and convince them that we are not betraying basic principles.'