A factory for manufacturing prefabricated housing units is being planned for Cambridgeshire to ease the housing crisis in the East of England.

A site has yet to be finalised for the manufacturing facility, which will produce 3000 units a year, but it is set to be built by the end of 2006. It is being built by Vanguard Modular Building Systems, which is investing £18m in the project.

Vanguard is also in talks with Cambridgeshire council to provide 70 factory-built homes for a demonstration project near Cambridge.

The project, which Vanguard has entered into the government’s £60,000-house design competition, includes 28 affordable homes.

The pilot scheme is part of the council’s SmartLIFE initiative to identify cost-effective ways of delivering homes in Cambridgeshire. There is a shortfall of about 2000 homes a year in the county and, to meet government targets, 89,000 homes need to be built by 2021.

A vocational training college for modern methods of construction is also being built as part of the SmartLIFE affordable housing initiative. The £2.5m centre designed by Annand & Mustoe is located at the Science Park of Cambridge Regional College and will be completed by contractor Bluestone by January 2006.

SmartLIFE is also building 60 homes on English Partnership sites using modular construction.