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The scheme, originally proposed by the NHF and the Council of Mortgage Lenders (CML), will see not-for-profit housing associations stepping in to buy properties from households at risk of having their homes repossessed, at the fair market rate.
The household will then be able to stay in the home either as part-owners, with a share of the equity, or as social tenants paying an affordable rent.
The scheme is being launched at a time when more and more people are struggling to meet their mortgage repayments and around 45,000 households are expected to have their properties reposed during the current year.
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It is hoped that the scheme will also serve to undermine the growing number of unregulated firms who buy properties from households struggling to pay off their mortgages for as much as 30% less than the market rate and then only let them stay on through short-term tenancy arrangements.
Ruth Davison, the Federation's Director of Campaigns & Neighbourhoods, said: "The mortgage rescue scheme is excellent news and is a charter for saving thousands of households from the nightmare of repossession.
"It will mean that many people at risk of being thrown out of their own homes will now be able to turn to a housing association for help.
"It will be fair, transparent and just - and will help ensure that thousands of families will be spared the stress, trauma and misery of repossession. It will, of course, be rigorously policed to ensure that only those who are vulnerable, and have not acted recklessly, will receive assistance.
"This scheme will also serve to undermine those shadowy companies currently making money out of people's misfortune by buying their properties at substantially less than the going rate - and then only letting them stay on a short-term tenancy basis."
(CD/JM)
