The abolition of the right to buy council houses came a step closer yesterday after Labour leader Wendy Alexander indicated that her party would look favourably on proposals by the government.

The right-to-buy policy was a touchstone of the Thatcher era and transformed the pattern of home ownership in Scotland but critics say it was a blunt instrument which saw the best of the public housing stock creamed off and left local authorities with a legacy from which they have never recovered.

Ministers have floated the idea of abolishing the right to buy new-build council and housing association homes at the weekend, by letting it be known that this will feature in a forthcoming green paper. The proposal brought an immediate and enthusiastic welcome from homelessness campaigners.

But it was played down by a government spokesman yesterday, who said: "As part of our forthcoming consultation on housing in Scotland, we will be looking at a range of options with the aim of improving the housing system and achieving better value for money.

"Suggestions that the consultation will invite views on the option of ending right to buy for new-build social housing are speculation, and we cannot comment on the detail of the green paper ahead of its publication."

But The Herald understands that the safeguarding of new social housing in public hands is seen as essential if local authorities and housing associations are to be persuaded to embark on the fresh wave of new building which is essential if the current crisis is to be tackled.

A senior government aide confirmed yesterday: "We will consult on the option of ending the right to buy for new-build social housing, only affecting tenants moving to newly built properties."

Ms Alexander said that as housing minister in 2000 she introduced restrictions on the right to buy for the most pressured areas in Scotland by giving councils the right to earmark new homes as not for sale.

"It seems to me this is looking at in extension of that policy. Let's see the proposals and we'll consider them."

If the SNP can win Labour agreement for such a change then it would be guaranteed to go through at Holyrood.

The idea was warmly welcomed yesterday by the housing charity Shelter Scotland. Gavin Corbett, policy manager, said: "The biggest priority for the Scottish Government should be a commitment to 30,000 new affordable rented homes over the next three years. But it is also important to stop the leaking of affordable homes at the other end."

Some 400,000 homes have been sold under the policy, but as a result the building of new homes by local authorities has fallen to a trickle and there are now around 20,000 on waiting lists for social housing.

But the Conservative disputed the claims of those who would scrap the policy. Mary Scanlon called it "one of the great successes of the Conservative government," adding: "There is no clear research to confirm that the right to buy has reduced the number of council properties for rent."

The latest development came as a coalition of housing groups warned that a huge increase in government spending is needed to solve the affordable housing shortage.

An extra £750m is needed over the next three years to build 30,000 affordable homes according to Shelter Scotland and the Chartered Institute of Housing in Scotland. They claimed only 18,000 new and affordable homes could be built unless a significant rise in cash is allocated to the sector.