The extra cash raised from cuts to subsidies for high earners living in social housing will go straight to people living in council properties.
As much as £250 million a year by 2018-19 could be raised towards reducing the country's debt burden.
Expectations are that Chancellor George Osborne will argue that 9% of all social tenants in England are now on higher incomes while enjoying the benefit of an average £3,500-a-year per household in reduced rent.
They include over 40,000 with annual household incomes in excess of £50,000 and a further 300,000 with incomes over £30,000.
The move builds on measures introduced under the coalition that enabled housing associations and local authorities to charge market rents to those on incomes of more than £60,000.
Chancellor George Osborne looks set to cut the amount of social housing cash available to council and housing association tenants, according to reports.
Osborne is expected to use his summer Budget to clampdown on taxpayer-funded subsidies for social housing tenants who earn more than £30,000 per household, or £40,000 in London, meaning they will have to pay a market or near market rent in future.
Currently the earnings cap at which housing associations and local authorities are able to charge tenants market rents is £60,000.
The housing subsidy cut is expected to affect 9 % of people in England who currently rent at lower than market rents and is hoped to help the government raise an extra £50 million a year by 2018-19.
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