The government will unveil a series of pilot council house building projects next week.
Building has learned that the government will announce a list of councils that have agreed to set up special purpose vehicles (SPVs) to build council homes when it publishes its housing green paper next week.
The list is expected to include Barking and Dagenham council, where the British National party has built up support by exploiting housing shortages.
The councils will put land into the SPVs and then seek a partner, that could be a private developer or a social landlord.
A source close to the green paper said that councils will be able to use their SPV stakes to ensure the provision of more affordable housing than if the sites were sold off to a developer.
Authorities will also be able to prevent the sale of properties through the right to buy, which has eroded the stock of social housing.
The communities department has already tested the market to establish the level of interest in establishing SPVs. Colin Dixon, managing director of developer United House, said that there was plenty of appetite for getting involved in SPVs.
He added that it would enable more councils to carry out wide-ranging estate regeneration projects.
“The Decent Homes programme is half a strategy and the government recognises that it needs to go further.”
Last year, 279 of the 180,000 homes built across the whole of England were council properties.