The number of homes changing hands jumped by 17 per cent during July as buyers continued to return to the property market.
Around 76,000 residential properties were sold for at least £40,000 last month on a seasonally adjusted basis, up from 65,000 in June and the highest figure since May 2008, according to HM Revenue & Customs.
The figures are further evidence that the housing market is benefiting from the traditional summer bounce.
But economists have warned that the improvement may not be sustained during the second half of the year, due to the ongoing problems in the mortgage market and rising unemployment.
The number of transactions was even higher on a non-seasonally adjusted basis, with 82,000 properties changing hands during July.
It was also the sixth consecutive month during which sales have either risen or stayed the same on this basis.
The latest figures come the day after the Council of Mortgage Lenders reported a 26 per cent jump in mortgage lending during July to £16 billion.
But the group said activity still remained very low by historical standards, with lending the lowest for July since 2001.
It added that it expected a slowdown in both lending volumes and property transactions during the latter part of the year.
The recent pick-up in activity has helped to stem the downward trend in house prices, with some economists now predicting property prices will end the year higher than they started it.
But the current stability is thought to have been caused by a shortage of homes on the market, which has offered some support to prices.
It has been warned that if a large number of properties are put up for sale, either because their owners can no longer afford their mortgages, or because people become more confident about the property market, this could trigger renewed price falls.
A north/south divide is also developing, with the market generally performing best in southern regions, where the property shortage is most acute.
Ray Boulger, senior technical manager at John Charcol, said: “The figures clearly confirm the trend we have seen since the spring.
“We are likely to see very low transaction volumes compared with what we are used to for quite some time.
“But I think we have been through the nadir and once confidence starts to come back and builds, it will bring more people back into the market.”
He added that the market was likely to be held back by the lack of mortgage finance.