Lifetime council homes could be scrapped and replaced with fixed-term contracts based on need, the Prime Minister David Cameron has revealed.

Speaking in Birmingham, Mr Cameron said he wanted to increase social mobility by ensuring tenants had the opportunity to move around to find work.

He said: ‘At the moment we have a system very much where, if you get a council house or an affordable house, it is yours forever and in some cases people actually hand them down to their children. And actually it ought to be about need. Your need has got greater ... and yet there isn't really the opportunity to move.

‘There is a question mark about whether, in future, should we be asking, actually, when you are given a council home, is it for a fixed period, because maybe in five or 10 years you will be doing a different job and be better paid and you won't need that home, you will be able to go into the private sector.

‘So I think a more flexible system – that not everyone will support and will lead to quite a big argument... looking at a more flexible system, I think makes sense.’

But Labour’s shadow housing minister John Healey believes the country needs 'more secure homes not less'. He said: 'Before the election Labour warned the Tories had a secret plan to get rid of secure tenancies and they accused us of scaremongering. Less than three months later we have the truth. This is so important because people highly value the affordable cost and long-term stability of secure tenancy.’

Housing minister Grant Shapps quickly waded into the row saying: ‘We are committed to protecting the security of tenure and rights of those currently in social housing. But we should also look at ways of how best to help the most vulnerable in our society, and how to tackle the record 1.8 million households that are now on social housing lists.’