But under the plan, government agencies and enterprises would be able to build homes for their staff if they had extra land and resources to do so, the Information Times reported yesterday, quoting Guangzhou Mayor Zhang Guangning .

Mr Zhang said the developments would have to be in line with government landscaping and land-use plans.

The move is part of a government initiative to provide affordable homes for low and middle-income families amid double-digit increases in property prices in the city. Housing prices in Guangzhou jumped 15.7 per cent last year.

Mr Zhang was earlier quoted as admitting for the first time that the government had yet to find an effective way to rein in property prices. The local government unveiled a five-year housing plan last September to build more subsidised homes for disadvantaged families.

Guangzhou-based property analyst Han Shitong said the reinstatement of the scheme harked back to the era of the planned economy, when only employees of government agencies and state-owned companies had access to decent homes.

Mr Han said he believed the new policy was 'a step backwards and would lead to abuses of power by some prestigious companies for their own gains, and lead to renewed social inequality'.

He said the scheme could also open the way for unscrupulous employers to siphon off money from public coffers.

The Ministry of Construction is investigating several schemes in cities including Chongqing in which people were duped into contributing funds to build houses without any guarantees the projects would go ahead or their proceeds would be used properly.

Mr Han said the move represented a policy shift by the local government away from leaving property prices to market forces. The central government has yet to respond to the proposal.

The Information Times quoted Jian Wenhao , director of the Guangzhou Land and Housing Bureau, as saying: 'The reason the government would allow employers to build homes on their own premises is due to ... the need to improve public housing.'

Mr Jian said the government would not allow employers to buy extra land to build houses and would make sure the homes were allocated to poor families. But he said universal access to decent homes did not necessarily mean every family had to own one, 'so employers could provide employees a place to live while maintaining the rights to the property'.