Melanie Johnson, economic secretary to the Treasury, revealed the timescale in an interview published on Friday.

She said the aim was for any regulation to balance the maintenance of a competitive and dynamic mortgage market with protection for the needs of the consumer.

There have been complaints from housebuyers for years about the way the UK mortgage market operates.

Ms Johnson appeared to be keen to reassure the industry that the government was aware of their concerns about the effect of tough new curbs.

She told the Financial Adviser weekly newspaper: "Some have suggested that this government is biased towards statutory regulation in general.

"That is not true. We are certainly prepared to regulate where that is clearly in the best interest of consumers.

"But we recognise that regulation implies burdens on industry, and the potential to restrict innovation and competition if not introduced carefully and proportionately.

"We would not regulate lightly in any circumstances. Our guiding principle in regulation of financial services is `a light touch where possible, protection where necessary'.

"That is a principle, not a slogan, and one which we are determined to apply to ensure the right balance is achieved."

Insurance tie-ins

The MP said they had received over 150 responses to the Treasury consultation process on mortgage regulation.

"The industry has been very forthcoming and constructive in contributing to the consultation process.

"That is very encouraging, and I am grateful to everyone who has taken part," she added.

Chancellor Gordon Brown asked Ms Johnson to review the benefits of new requirements which would make borrowers better able to understand charges and conditions.

This followed concern about the complexity of mortgages on offer and issues such as their related lock-in periods and redemption penalties.