Rachel Reeves revealed that she would also change the rules to allow local authorities to keep the money made from selling homes through the scheme to reinvest in social housing.

It follows her announcement ahead of today’s speech that the government would invest £500m to build a further 5,000 social homes.

And she said today that government would be consulting on higher rents for social tenants to give providers longer-term financial stability.

She said: “We will put the right policies in place to increase the supply of affordable housing, having heard representations from local authorities, social housing providers and from Shelter, I can today confirm that the government will reduce Right to Buy discounts and local authorities will be able to retain the full receipts from anything so that we can reinvest them back into the housing stock and into new supply.

“By doing this, we will give more people a safe, secure and affordable place to live.”

Currently, Right to Buy discounts offer council tenants up to 70% off their home purchases.

Last year, 10,896 homes were sold through Right to Buy while only 3,447 were replaced.

However, the Chancellor also confirmed she would pave the way for social landlords to increase rents.

She said: “We will provide stability to social housing providers with a social housing rental settlement of CPI plus 1% for the next five years, and we will deliver on our manifesto commitment to hire hundreds of new planning officers to get Britain building.”

Together chief commercial officer Ryan Etchells says: “The Chancellor’s reduction in the discount allowing tenants to buy their council homes under Right to Buy will mean they will have to pay, in most cases, tens of thousands of pounds more to be able to get on the housing ladder.

“The Government says this will make the scheme ‘fairer and more sustainable’ but the move seems incredibly unfair, when some people who may have lived in their council homes for years and had planned to make it their own will now be simply locked out of home-ownership for good.”

Housing charity Shelter has previously warned that trying to boost the stock of social homes without reforming Right to Buy is like running a bath without putting the plug in.

In the 44 years since the scheme launched under Margaret Thatcher, more than two million homes have been sold to more than 4.5 million sitting tenants.