Business secretary Vince Cable has called on his own government to consider whether the second stage of the Help to Buy scheme should go ahead.
Recent figures released by the Halifax said the first part of Help to Buy, the equity loan, and the Funding for Lending Scheme had already sparked the biggest rise in house prices since 2010.
Figures like this have led Cable to suggest the government rethink whether it wants the second phase of the scheme to go ahead.
"The controversy is over the second part of the scheme, which is a guarantee scheme that does not take effect until the new year," he told Sky News.
"Obviously the government is going to have to look at that in the light of the way the market is developing."
The Liberal Democrat was then questioned whether the second half of the scheme should be cancelled or altered and said: "We should certainly think about how it should come into effect, whether indeed it should come into effect, in the light of changing market conditions.
"We don't want a new housing bubble."
Cable joins former Bank of England governor Mervyn King, the IMF and the Adam Smith Institute as critics of the scheme.
Earlier this week Chancellor George Osborne issued a vigorous defence of Help to Buy, one of his flagship policies.
He said high LTV mortgages were not ‘exotic weapons of financial mass destruction' and that government intervention was still needed.
However, Cable said there were now large parts of the country which had no need for a mortgage guarantee scheme and that its implementation could cause prices to spike.
"There are people out there, the Royal Institute of Chartered Surveyors yesterday were warning this was a real risk. I think in many parts of the country it clearly isn't a problem.
"If you are in Northern Ireland or Wales or indeed the East Midlands you would wonder what all this is about. But certainly in London and the south east, in the north east of Scotland, in other areas, there are serious housing inflationary pressures."
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