The former Tory leader Iain Duncan Smith launched a new wave of backbench pressure on the government to solve the building safety crisis, leading a rally of affected leaseholders into a chant outside parliament of: “Michael Gove, we want justice!”

Hundreds of homeowners trapped in unsellable and dangerous homes and facing remediation bills of up to £200,000 each gathered in Westminster on Thursday to press the government to legislate to protect them from post-Grenfell fire safety works.

Duncan Smith, who with other Conservative backbenchers is preparing to mount a fresh rebellion against the government’s building safety bill, told them: “The developers have got away scot-free. There is no question leaseholders should have to pick up the bill when the cladding was illegal at the time.”

The protest saw affected leaseholders from Ipswich, Cardiff, Manchester, Leeds, Bristol and London descend on Parliament Square amid optimism from campaigners that more Conservative MPs could join 32 who have already voted against the government’s refusal to cover costs that have been estimated at £15bn. The government has earmarked £5bn to pay for the removal of combustible cladding on buildings over 18 metres, but is only offering loans on shorter buildings and won’t pay for other fire safety defects, which have emerged in thousands of blocks.

The crowd included a mother who has been diagnosed with PTSD after the building housing her shared-ownership flat in east London was discovered to be wrapped in combustible cladding and she faced a £85,000 bill.

Her husband, Sam Musguin-Rowe, 32, said: “It makes me feel like I am a bad father that every night I put my daughter to bed in a building that could catch fire at any moment. Please [Michael Gove], I implore you to make this right for leaseholders and end this torture.”

A family facing a £100,000 bill in a different building described how they live with a bag packed in case they need to flee a fire. “[Gove] needs to put himself in our position,” said Antonella Montresori, 52, a computer programmer and mother of two. “We feel like prisoners and we need to get out.”

Attempts by ministers to persuade freeholders and property developers to pay for the defects have had only limited success, leaving hundreds of thousands of people in financial limbo, and many suffering mental health problems.

Peter Bottomley, the Conservative MP for Worthing West, told the crowd: “Michael Gove, can you hear us? Stop the spivs, stop the opportunists, challenge the investors, end the exploitation of you who are stuck in the rotten leasehold system.”

Tackling the building safety crisis that continues to spread more than four years after the Grenfell Tower fire is set to be one of Gove’s first challenges. The government has published a building safety bill that so far does not commit to preventing homeowners from paying to fix defective works that were not their fault. Stephen McPartland MP told the rally he would table amendments to protect them when it goes through parliament in the coming months.

Will Martin, who lives in the affected Metis building in Sheffield, described “suffering in torture when you lie awake at night and can’t sleep” and asked Gove to “hear our cries and understand the pain and suffering we are going through”.

The rally attracted cross-party support. Labour MP Justin Madders described the crisis as “one of the biggest systematic rip-offs this country has ever seen” and “an industrial-sized scam”.

Sadiq Khan, the mayor of London, said there were 8,000 high-rise residential blocks in London and said the crisis was rooted in the “broken” system of leasehold.