The Federal Government will donate up to $1,500 a year to people who use first home saver accounts to amass a deposit to buy a home.

The Government will contribute $750 for every $5,000 people save. Those who save $10,000 in a year towards a home will receive $1,500 from the Government.

The scheme is expected to cost the Government $850 million over four years. The first home saver accounts will be special accounts managed by super funds, starting from 1 July this year. They will require people to save for a minimum of four years before being able to access the funds.

The move has been welcomed by the Housing Industry Association, which says measures to promote savings and reduce reliance on debt are to be encouraged.