Housing associations could be privatised with some 2.5m homes sold into private hands, a think tank has suggested – sparking furious opposition.

Policy Exchange said that privatising housing associations, involving the sell-off of mainly ex-council houses, would be the “most obvious” way for the Government to prevent £60bn of debt being added to the national balance sheet.

The UK’s largest union, Unite, said it would fight any such moves tooth and nail.

It said a mass sell-off of properties to the private sector would be a national scandal.

Sally Kosky, Unite national officer for the not-for-profit sector, said: “If this is allowed to go ahead, then what will happen is in the space of less than 40 years, the council house stock assiduously built up since the First World War will end up in the hands of fat cat property developers, having passed through the housing association stage.

“At a time when the need for housing has edged to the top of the political agenda, it would be a national scandal which Unite would fight tooth and claw.

“Unite has thousands of members in the housing sector and will want to be at the centre of a campaign to stop any plan to privatise the biggest providers of social housing in the country.

“Unite believes that a Housing Bill is due to come before MPs by the end of the year and if the privatisation of housing associations is included, there will be a political battle royal.”

Housing associations provide about 2.5m homes for more than 5m people across England.