A Housing Corporation consultation paper to be published next month will set out stricter rules on the allocation of public funds.

Officials briefed housing association chief executives on the changes at a private conference organised by the National Housing Federation last week.

Applications for Housing Corporation grant will be scrutinised in greater detail, with the regeneration potential of projects playing a more important part in decisions.

Federation chief executive Jim Coulter said, in future, contractors must also have a better understanding of housing needs across whole regions. This was because the corporation believed that, in the past, unnecessarily localised funding had led to mistakes, with some local authorities losing out because a neighbour had received too much funding.

The corporation's funding has remained stable, but it is now contributing a smaller proportion of the total money spent on new social housing. This is because councils have extra funds, thanks to the release of capital receipts and more private investment.