David Cameron has signalled the end of lifetime council tenancies, as he warned that the coming public spending cuts could shrink the state for good.
Speaking in Birmingham, the Prime Minister said that he wanted to see fixed terms of as little as give years for all new council and housing association tenancies, to help increase social mobility.
Council tenants should have to move into the private sector if their earnings improved significantly, he said, to help to tackle the backlog of five million people on waiting lists.
A consultation paper, which could be published tomorrow, will outline the plans. It would involve regular reviews of tenancies to see if the tenant has sufficient income to move to the private sector. It will also check whether still need such a large property, for example if their children have grown up. It will be implemented by local council.
At present, council tenants have tenancy for life and can hand their property onto their children. Housing association tenants have tenancy for life, too, after a probationary year, although they cannot pass the property on.
Cameron conceded that it would prompt "quite a big argument" but said that he wanted to see a more flexible system where people could "move through council housing rather than seeing it as something you get for life".
The communities department argues that tenancy for life is not an effective use of scarce resources.
The coalition's housing minister, Grant Shapps, said that those losing out from the current system were the 1.8m on waiting lists for council housing.
Labour said what was needed was "more secure homes, not less".