The government stands to lose a court case that could force housing associations to obey onerous European procurement rules.
It has gone to the European Court of Justice to challenge the European Commission's view that registered social landlords are "public bodies" under European law.

Such a definition would mean they would have to advertise contracts in the European Union's Official Journal, including development and maintenance work. This process could add four months to a project.

An RSL would have to decide on criteria for selection and it would be difficult to negotiate the contract thereafter. There is also less opportunity for negotiation.

Housing lawyers say the government is losing its fight to change the commission's view that RSLs should be treated as public bodies because they are regulated by the Housing Corporation, which is run by the government.

The government is understood to be worried that classing RSLs as public bodies could add to the public sector borrowing requirement.

But an ODPM spokesman said: "Ministers have not decided whether to accept the commission view."

It will make an announcement on the case at the end of the month.