George Osborne is under pressure to rule out second home owners getting state-backed 95% mortgages under his flagship housing policy.
High levels of second home ownership cause huge resentment across Devon and Cornwall, with critics blaming part-time residents for forcing up house prices and undermining local services.
The 's Budget on Wednesday revealed state loans for deposits and mortgage guarantees would help hundreds of thousands of first-time buyers and "second steppers". While the policy blocks buy-to-lets, it does not explicitly rule out would-be second home owners from taking advantage.
Today, Mr Osborne could not rule out support for second home owners when pressed on Radio 4's Today programme.
There are around 26,000 holiday homes across Devon and Cornwall.
Councillor Alex Folkes, a Liberal Democrat who has campaigned to restrict second home ownership in Cornwall, said: "Liberal Democrats have worked hard in Cornwall to close the loopholes that give unfair advantages to second home owners. The council has ended the second home council tax discount and we want to make owners apply for change of use permission before they can turn a house into a second home. Liberal Democrats have made affordable homes for local people one of our top priorities. Cornwall cannot afford for Mr Osborne to undo all this hard work and so we need him to be clear that his new scheme will not subsidise second homes."
He added: "Yesterday's budget did a lot that is right for Cornwall. It extended the income tax threshold to £10,000 a year early - fulfilling a promise made on the front page of the Lib Dem manifesto. If provided much needed help with child care costs and provided a boost to the beer industry. It would be a shame if all this good work was overwhelmed in the public mind by an ill-defined policy on new homes."
Ed Balls MP, Labour's Shadow Chancellor, said: "Not only is George Osborne pressing ahead with a tax cut for millionaires it now seems that his mortgage scheme will help people, no matter how high their income, to buy a subsidised second home worth up to £600,000.
"The Government is basically saying that if you've got a spare room in a social home you'll have to pay the bedroom tax, but if you want a spare home we'll help you buy one.
"Is the Government really going to give millionaires a tax cut averaging £100,000 and then give them a taxpayer guarantee if they use that money as a deposit on a house - a second home or even a home to buy to let? Not just tax cuts for millionaires but subsidised mortgages for millionaires.
"Surely people struggling to get a mortgage and those who want to own their first home must be the priority for help, not the small number who can afford to buy a second one. We will only tackle the housing crisis and help first time buyers if we finally build the new affordable homes we have said should be at the heart of any proper plan for jobs and growth.
"This more of the same Budget stuck with a plan that is completely failing on growth, living standards and the deficit, but the one new thing George Osborne announced is already unravelling."
