The Housing Secretary has been accused of a “betrayal” of hundreds of thousands of leaseholders after he unveiled a new £3.5 billion package to end the “cladding scandal”.

In a Commons statement, Robert Jenrick said the “exceptional” intervention means no leaseholders in high-rise blocks in England will face charges for the removal of unsafe cladding.

But his announcement drew a furious response, with critics – including some Tories – warning it fails to address the problems faced by residents living in unsellable flats in unsafe blocks.

Three-and-a-half years after the Grenfell fire tragedy in which 72 people died when flames spread via combustible cladding, the Grenfell United pressure group said it is “too little, too late”.

“We needed something to deal with this mess once and for all – we didn’t get that today,” they said in a statement.

“Residents living in unsafe homes will go to bed tonight worrying if their building will qualify or be left out once again. And bereaved and survivors of Grenfell will lay awake fearful that what happened to us could still happen again.”

Tory MP Stephen McPartland – a prominent critic of the Government’s handling of the cladding crisis – dismissed the plans as “all smoke and mirrors”.

He said Mr Jenrick had ignored the continuing need for “waking watches” and the “excessive” insurance premiums which represent the main costs for many leaseholders.

“I am listening to Robert Jenrick’s announcement with my head in my hands. Wondering how he can have got this so wrong. It is a betrayal of millions of leaseholders,” he tweeted.

He later told BBC Radio 4’s World At One: “There is incompetence at the heart of this now and it’s time to call that out. Number 10 now has to get involved and take a grip of this situation.”

In his statement, Mr Jenrick said the Government will fund the removal and replacement of unsafe cladding on tower blocks in England more than 59ft (18m), or six storeys.

He said it will also develop a long-term scheme to ensure that those in lower to middle-rise blocks never have to pay more than £50 a month for cladding removal.

To help meet the costs, he said the Government is imposing a new levy on developers of certain high buildings in England and a £2 billion UK-wide tax on the residential development sector.

Mr Jenrick said that, without the Government’s intervention, many building owners would have continued to pass on the costs of cladding remediation work to leaseholders.

“That would risk punishing those who have worked hard, who have bought their own home, but through no fault of their own have found themselves caught in an absolutely invidious situation,” he said.

“I’m therefore, today, making an exceptional intervention on behalf of the Government and providing certainty that leaseholders in high-rise residential buildings will face no costs for cladding remediation works.

“This will ensure that we end the cladding scandal in a way that is fair and generous to leaseholders.”

However, shadow housing secretary Thangam Debbonaire said the Government is still under-estimating the scale of the problem.

“They still don’t know how many buildings are unsafe, where they are or what danger they pose,” she told the Commons.

“Government inaction and delay has caused the building safety crisis to spiral. People cannot continue to live in unsafe, un-sellable homes. Home-owners shouldn’t face bankruptcy to fix a problem they didn’t cause.

“Unfortunately, these proposals will still leave too many people struggling and facing loans instead of being given justice.”

London mayor Sadiq Khan described the plans as “shameful”.

“Three and a half years after the Grenfell Tower fire and many leaseholders are still being told to pay for building safety issues they played no part in causing,” he said.

“Ministers need to give all leaseholders affected by this crisis the peace of mind they need and deserve.”

The End Our Cladding Scandal campaign group said: “The Government promised us no leaseholder would have to pay to make their homes safe. Today we feel betrayed.”

A London Fire Brigade spokeswoman said the service remained “concerned about the scale of the issues being uncovered in buildings across the UK, which are much wider than just dangerous cladding”.

She said: “The priority must be to get a resolution to all these issues as quickly as possible so that people feel safe in their homes.

“Almost four years after the Grenfell Tower fire, it is concerning that there are still so many members of our communities who live in fear and we will continue to work with Government and building owners to ensure the safety of buildings now and in future.”