HARD-up families struggling with debts will get interest-free cash, under a scheme to be unveiled by the Chancellor tomorrow, in a victory for The Sun.

Philip Hammond will extend a helping hand to save poorest people from the clutches of payday loan sharks.

The Sun has been campaigning to help protect millions of people stuck paying off high cost credit loans - where rates can be as high as 6,000 per cent - as part of our Stop The Credit Rip-Off campaign.

He wants banks to forge a new partnership with debt charities to support low-income households pay for unexpected costs. The action will be announced in Monday's Budget in a package of measures to tackle problem debt. It follows widespread concern over payday lenders such as Quickquid who offer short-term cash fixes at sky-high rates, as well as rent-to-own and door step loans. Mr Hammond believes he can devise an affordable alternative to high-cost credit which has left hundreds of thousands in a spiral of debt.

He aims to copy the “Good Shepherd” scheme in Australia which helped four in five people to climb out of the red. In a further move, the six-week “breathing space” to protect borrowers from creditor action will be increased to 60 days – giving them more time to get their finances back on tract. The Chancellor is also expected to announce a £2million challenge fund to find a solution to make it easier and more attractive to borrow from affordable lenders.

A Treasury source said: “You can expect a number of measures as part of a long-term plan to tackle problem debt and ensure all families have access to the financial services they need.” Payday loans are more damaging to our health than any other form of credit, according to a recent report. They are widely seen as the worst type of credit, ahead of unauthorised overdrafts. Nearly 11,000 complaints were made about payday loans between April and June this year – a 251 per cent rise on the 3,126 filed to the Financial Ombudsman Service in the same period the previous year.

In May, the city watchdog - the Financial Conduct Authority - promised to cap interest rates on rent-to-own loans, after a cap on payday loans in 2015 halved the number of people with problem debts.

While experts have warned that millions are trapped in spirals of debt due to other high cost credit, such as doorstep loans.

Last night the government action was welcomed by Money saving expert Martin Lewis. He said: “It’s good news. We’ve been at the mercy of payday lenders and exorbitant interest rates for far too long.” But Labour dismissed the plan as a “farcical gimmick”. Shadow chancellor John McDonnell said: “It will do nothing to prevent more people falling into debt traps, since these measures do not cap excessive interest rates and other fees.”