People on low incomes will be helped onto the property ladder

Malcolm Chisholm said the Homestake scheme would see prospective buyers pay between 60 and 80% of the property's market value.

Housing associations would provide the remaining money to help first-time buyers onto the property ladder.

But the body representing the house building industry said councils needed to release more land to build on.

The scheme was officially launched in Inverness on Tuesday. Separately, a pilot scheme for the open market will be trialled in Edinburgh. More than 500 people have already expressed an interest in the scheme.

'Huge expansion'

About 20 Homestake projects are expected to begin this year and the executive said it hoped the scheme would help 1,000 homebuyers annually.

Mr Chisholm said prospective buyers throughout Scotland faced financial problems and the executive wanted to help them purchase their property.

The Scottish Executive said it was committed to a "huge expansion" in affordable housing, representing 21,500 homes over the next three years.

The Homestake scheme is based on increasing the supply of properties Malcolm Chisholm Communities Minister

Speaking on BBC Radio's Good Morning Scotland programme, he said: "We think that helping aspiring homeowners and giving them new opportunities is crucial.

"The Homestake scheme is based on new build, in other words it's increasing the supply of properties."

Mr Chisholm said he had sent out "strong signals" to local authorities about the need to release adequate amounts of land for housing.

"Low-cost home ownership won't just help the individuals who are going to benefit from the Homestake scheme, it will also relieve pressure on the social rented sector," he added.

Land cost

Kennedy Foster, of the council of Mortgage Lenders (CML) in Scotland, described the scheme as a "positive step" for the housing market.

But Homes for Scotland director of planning for Allan Lundmark said the scheme would not necessarily have a long-term impact on the shortage of affordable housing.

Mr Lundmark said: "The problem for us in terms of house prices in Scotland is the high price we're forced to pay for land.

"So bringing high house prices down in the present market conditions is going to be very, very difficult.

The cost of land is now about a third of a house price

"We have to find new mechanisms for bringing people into the housing market."

Mr Lundmark said there was a shortage of land in Scotland which planning authorities would be prepared to lease for housing, adding that competition for land was "fierce".

About 15 years ago, the price of land contributed 10% of the cost of a house, but that had climbed to about 30% in today's market, he added.

Mr Lundmark said the communities minister should be pressurising local authorities to release more land for housing.

'Appalling situation'

"The average of a first-time buyer in Scotland now is in the mid-30s, about 10 or 15 years ago it was in the mid-20s.

"That's an appalling situation, so we need to find ways of getting people into the market.

"So this is a welcome scheme to get people into it, but we have to start tackling the root cause of the problem which is high house price inflation driven up by supply shortages."

First-time buyers are a key target group but the scheme is also designed to help disabled people, those who rent but want to move into home ownership and existing owners whose homes are scheduled for demolition.

Applications are being handled by housing associations around Scotland.