A second contract, worth £20m, has been made between Islington council in north London and a consortium of United House Solutions, Halifax Bank of Scotland and Hyde Housing Association.
Chris Wilson, executive director of local authority adviser the 4Ps, said: "This will send the strongest possible message to local authorities and the bidding market that PFI for housing can and does work and that it offers a viable investment route for local authorities looking to meet the government's decent homes standards."
Islington and Manchester are part of the first wave of PFI housing schemes. The remaining six projects due to be signed are in Sandwell, Leeds, North East Derbyshire, Reading and the London boroughs of Camden and Newham.
n A Bovis Lend Lease/Bank of Scotland joint venture has won a £20.4m PFI school contract in Lambeth, south London. It is the first PFI contract signed by the Lambeth Local Education Authority. It is a 25-year contract.