The chancellor wants lenders to pass on interest rate cuts
Homeowners will have enough support to ensure that their homes are not repossessed, the government says.
The comments came after key mortgage industry figures met Chancellor Alistair Darling and Housing Minister Caroline Flint at 11 Downing Street.
But ministers did not outline how they would stop people losing their homes.
The Council of Mortgage Lenders (CML) described the meeting as "useful" and said lenders were playing their part in keeping customers in their homes.
"We want to ensure there continues to be stability and fairness in the housing market, and that the support is in place for consumers who may need it right now," said Ms Flint, following the meeting.
Concerns have been raised about the steep rise in repayments facing an estimated 1.4 million people coming to the end of short-term fixed rate deals, particularly those who do not have high levels of equity in their homes.
Mortgage providers have tightened up on lending because the banks have not been keen to lend to each other.
Mortgage lending in the first three months of the year was down by 8% compared with the first quarter of 2007, according to the CML's latest figures.
The number of mortgage products on the market has now dipped below 4,000 as a result of the current climate, according to financial information service Moneyfacts.
That is a dramatic drop compared with the 13,428 products available in April last year.
Tuesday's meeting followed the chancellor's backing of a £50bn Bank of England plan to allow banks to swap mortgage debts for government bonds to help them during the credit crunch.
Conservative Treasury spokesman Philip Hammond told BBC NEWS that the government had not recognised the true nature of the issue.
He said there were two factors behind the increased price of mortgages - a shortage of liquidity and a lack of confidence in the housing market.
"I think the government - now that the Bank of England has made this intervention to address the liquidity problem - will have to focus its attention on how to support the housing market," Mr Hammond said.
Meanwhile, Liberal Democrat Treasury spokesman Vince Cable called on the government to be clear about what promises it had made to mortgage lenders.
"One of the possibilities being mooted...is that the taxpayer could have been tapped for additional money to provide additional benefits to people who are in mortgage arrears," he said.
"We really need to find out exactly what has been happening in these talks so that the government isn't making any more concessions at the expense of the taxpayer."
Lenders described the plan as an "important step" in tackling the industry's funding difficulties.
They said that "in due course" it should help banks and building societies to ensure that competitive mortgage products were available to potential borrowers.
Latest figures showed that the number of people whose homes were repossessed in 2007 went up by 21%. The CML said 27,100 homes, the highest figure since 1999, were taken over by lenders after people fell behind with repayments.
But the CML said that the repossession levels remained low in a strong economy and the government stressed that lenders should continue to treat customers "fairly and sympathetically".
'Not the 90s'
Ms Flint said: "It is important to recognise we are dealing with an entirely different situation in the market from what was experienced in the early 90s.
"Demand for housing from first-time buyers and young families is high and the fundamentals of the economy are sound.
"But we know that some prospective borrowers are facing difficulties at the moment because of the global supply of credit."
The chancellor said that the government was working to ensure a fair and functioning UK mortgage market.
"I hope that lenders continue to take their responsibilities towards customers seriously," he added.
The CML will report back at the end of May with information on mortgage-holders facing difficulties.