A government scheme to help people avoid losing their homes has assisted fewer than half as many households as expected at three times the cost.

The Mortgage Rescue Scheme, launched by the previous government in January 2009 following a spike in repossessions, has helped only 2,600 people, compared with a 6,000 target, the National Audit Office (NAO) says.

The cost of helping each household was nearly three times higher than anticipated at an average 93,000, compared with a predicted 34,000, while the overall cost of the scheme rose to 240 million from a planned 205 million.

Under the scheme, people unable to keep up with their mortgage can apply for an equity loan to help reduce their monthly repayments, or they could sell all of their home to a housing association and rent it back again.

The NAO says the last government "made the wrong call" on the number of people who would hand over complete ownership of their home, rather than enter a shared ownership agreement.

The Department for Communities and Local Government (DCLG), which oversees the scheme, originally estimated 85% of households would opt for shared equity or shared ownership, with only 15% choosing to relinquish ownership of their home and rent it back.

In reality, just 1.5% of people went down the shared equity route, with 98.5% choosing to sell their home to a housing association.

This meant the scheme has been more expensive than anticipated, as the average cost of a shared equity rescue was estimated at 12,000, compared with an estimated 78,000 for full sale.

Both types of rescue also proved to be more costly than planned at 57,000 for shared ownership and 93,000 for sale-and-rent-back.

Amyas Morse, head of the National Audit Office, says: "The department made assumptions about the level of demand for the Mortgage Rescue Scheme and made the wrong call."