Local authorities across England have spent the summer thrashing out plans for a new wave of council housebuilding.

Councils such as the London boroughs of Croydon, Islington and Barnet, as well as Norwich and Newcastle, are understood to be leading the way in responding to July’s housing green paper.

In it, housing minister Yvette Cooper called for councils to build thousands of homes to help in the “national drive to support more affordable housing”. The target is an extra 3 million homes nationwide by 2020.

To achieve this Cooper is encouraging local authorities to choose one of six possible models for building council housing.

The most likely of these models will be a local housing company run in partnership with a housing association. This will see councils providing land for building more homes and in return retaining a stake in the rental income of the properties.

A housing association source said: “We have already held a number of discussions with London councils about this issue … Croydon, Islington and Barnet are all keen.”

Mike Davis, director of housing at Croydon council, said: “We are interested in the government’s proposals. We are already building 34 homes at the moment but want to establish an ongoing new-build programme.”

Terry Stacy, executive member for housing at Islington council, said: “We would definitely be interested in bidding for Housing Corporation cash. We are working on plans at the moment.”

Steve Douglas, acting chief executive of the Housing Corporation, said his staff would be targeting the 20 councils with which they signed development agreements in the past year.

“We are already working with 10 arm’s-length management organisations and other development partnership bodies on the 2008-11 investment programme. Local authorities should be looking at the models to see what can work for them.”