Under pressure to do more for first time buyers, the chancellor appears set to ease the burden of stamp duty when he unveils his Budget this week.

Gordon Brown is expected to use his keynote statement on Wednesday to double the threshold at which the tax on homes is paid from £60,000 to £120,000.

Buoyed by recent improvements in the public finances, he is set to use any spare cash to take the sting out of promised Tory tax cuts in the election campaign with targeted moves of his own.

The likely move on stamp duty comes as research from Alliance and Leicester Mortgages, unveiled on Monday, found that just eight per cent of first time buyers are now avoiding the tax as the cost of homes rises.

Spokesman Stephen Leonard said: "Our research has found that the number of houses that are available to first time buyers under the £60,000 threshold today is severely limited.

"Stamp duty was never intended to be a prohibitive tax and with first time buyer activity at a 20-year low, this group of people could do with a helping hand.

"That is why we are calling on the chancellor to scrap the tax for first time buyers completely.

"The chancellor has a great opportunity to alleviate the strain on first time buyers by exempting them from stamp duty in this year's Budget - a move that would be welcomed by those struggling to achieve that first step on the property ladder."

Spending

Other measures set to be unveiled by Brown include changes in income tax thresholds to take more middle earners out of the top rate.

Married couples will get more relief, according to weekend reports, as will registered gay couples for the first time, while up to one million low paid workers may pay no tax at all.

Any left over funds will got towards extra spending on top of last year's three year budget settlements for Whitehall departments.

The chancellor's pet project of childcare could get more cash, as could pensioners who have been promised council tax relief by the Tories.

Meanwhile unions have urged Brown to raise more money by levying a windfall tax on the profits of oil companies.

The Transport and General Workers Union said on Monday that up to £5.5 billion could be put towards workers who have lost pension funds by hitting firms which have reported huge earnings in recent months.

"A one-off windfall tax based on the windfall of higher oil prices for the likes of Shell and BP would be justified and popular," general secretary Tony Woodley said.

"A windfall tax on overcharging banks would be a vote winner.

"A windfall tax would follow the Tory precedent of 1981 by clawing back excess bank profits and the Labour precedent of 1997 tax which funded the New Deal. Pensions justice demands the government act now."