The Government is expected to abolish a levy on so-called "granny flats" in England, giving families a tax break on extensions to their homes used to house older relatives.
The Communities Secretary Eric Pickles has said it is "fundamentally unfair" to charge households for annexes as well as their own homes.
As a result, hundreds of thousands of families could benefit from the plans rom tax breaks on "granny flats" under plans being considered by the Government .
It is believed ministers are also considering overhauling planning regulations and fees to make it easier for homeowners to convert garages and other outbuildings.
Mr Pickles told the Daily Telegraph: "We are keen to remove tax and other regulatory obstacles to families having a live-in annexe for immediate relations.
"We should support homeowners who want to improve their properties and standard of living. These reforms should also play a role in increasing the housing supply."
He said it was unfair for households to be charged twice by paying council tax on their homes and annexes - which are regarded as separate dwellings.
It is estimated that as many as 300,000 households in England could benefit from the change.
The reforms are expected to form part of a package of policies to increase housing supply and address the shortage of affordable homes over the next two years.