THE Treasury is investigating whether ministers should build hundreds of thousands of new houses to ease a critical shortfall, after an order by Danny Alexander.

The Liberal Democrat Chief Secretary to the Treasury warns that an extra 300,000 new homes are needed across the UK every year. If firms will not construct enough houses a "radical" approach may be needed, he said as part of last night's 2014 Shelter Scotland lecture.

The Highland MP admitted that such a scheme would be "very expensive".

But he said it could bring a number of benefits, including a boost for the economy.

However, critics will also question whether intervention by ministers will further distort the housing market.

Mr Alexander said the lack of affordable homes was a "major" problem.

"We cannot spend another decade coming up with good individual schemes, but as a country falling short.

"Our economy will be less stable, our society less fair."

He added that "radical ideas" might be required, adding "if we are going to be really ambitious about this then we have to explore all the avenues."

Officials are looking at whether ministers should build thousands of new homes.

"Having Government directly commission housing could act as a stabiliser and help builders ride (the) storms," Mr Alexander said.

A Treasury source said the proposal was still at an exploratory stage, "but this is something that government has not done for decades".

In his lecture, Mr Alexander also attacked the "bedroom tax" saying its implementation "has left much to be desired".