An announcement on additional funding for arm's-length management organisations is expected in the autumn
Deputy prime minister John Prescott will return to the House of Commons then with his plans for housing expenditure.

Prescott said last week that there would be extra funding for the stock transfer alternative once his department has consulted on how spending review cash would be allocated. Industry experts predict it will add up to around £700m.

This is sure to spark a bidding war among ALMOs who feel their initial awards were unfair.

Prescott also pledged to lower the threshold for arm's-length status. He said the Audit Commission rating requirement would fall from three stars to two.

The move is believed to be designed to enable existing ALMOs to qualify for the remainder of the £460m allocated to them in the previous spending round, as many are not expected to achieve a three-star rating in the near future.

This twin boost could well signal a rush in interest from councils – particularly in the North and Midlands – who have been frustrated by the apparent lack of choice in their attempts to meet the decent homes standard.

Eric Bowen is director of housing at Leeds Council, one of the successful second-round bidders.

He welcomed the relaxation of the rules by the government: "This is going to encourage more local authorities to look at ALMOs as a viable option."

But he added that in a further funding round with extra money, he would expect to receive the balance of the £92m Leeds initially applied for from the Office of the Deputy Prime Minister.

If many other councils do the same thing, the ODPM could be faced with a major headache as it could result in any increased funding being eaten up by existing ALMOs rather than being awarded to new bidders.