The government has bowed to industry demands and increased environmental standards in the Code for Sustainable Homes.

The ODPM announced last week that tougher water and energy efficiency standards will apply when the code is introduced later in the year. It also revealed that the minimum energy efficiency requirements would be in excess of the present Building Regulations.

The move was welcomed by environmental body WWF, which strongly criticised a draft of the code in December. Paul King, director of WWF's One Million Sustainable Homes campaign, said: "We are very pleased that the government has listened and responded in the way it has, with a commitment to introduce a mandatory code applicable to all homes."

The government also announced that housebuilders using on-site renewable technology would gain more code points and achieve higher environmental ratings.

Yvette Cooper, housing and planning minister, said: "We are looking at further measures to improve the sustainability of existing homes and guidance to further promote microrenewable technology and tackle climate change."

Jack Pringle, the RIBA president, said the architects' body was pleased the government had listened to industry calls. He said: "Although a number of issues still need to be addressed, I am glad the government is prepared to engage with the industry on this important project."

The Construction Products Association praised the higher environmental standards but added that the government must develop a unifying standard for sustainability in housing. Michael Ankers, chief executive, said: "If we have other standards trying to assess the same issue, the impact will be dissipated and the industry and homeowners will be confused."

The code will apply to all publicly funded homes. It was due to be introduced in April but will now supersede the BRE's recently revised EcoHomes standard later in the year.