As part of its $10.4 billion economic stimulus package the Government will provide $1.5 billion in assistance to first home buyers.

HIA Managing Director Ron Silberberg said when the first home owners grant was doubled for new house purchases in 2001 the number of new dwellings built increased by 3000 per month over a nine month period.

He said the measure would stimulate business activity and help address the severe housing shortage.

The HIA expected the initiative to provide a 15,000 boost in the production of new dwellings.

The Government will triple to $21,000 the current $7000 first-home buyers grant for people buying a newly constructed home and those first-home buyers moving into existing properties will receive a doubling of the allowance to $14,000.

``It is appropriate that the measure targets assistance for new housing to meet underlying and effective demand and importantly this measure provides immediate assistance,'' Dr Silberberg said.

``Production rates for new housing have continued to drop and this has exacerbated the gap between supply and underlying demand.

`` The measure announced today will provide some assistance in pegging this gap and will provide a healthy stimulus in activity for the Australian economy and help lift business confidence throughout the sector.

``This measure will provide an immediate stimulus for new housing and help restore business confidence across the sector particularly in the building product manufacturing sector.''

HIA has stressed the need to boost production of housing by 45,000 new dwellings per annum to meet current underlying demand.

Prime Minister Kevin Rudd also announced the Federal Government pacakge would provide a $4.8 billion down payment to pensioners, payable in December, $3.9 billion in support payments for families and $187 million to create new training positions.

Mr Rudd said the Budget would remain in surplus.