£500m approximately will be available in the second round of the Government’s Kickstart Regeneration Scheme after first round bidders are turned down due to not meeting value for money or quality standards, or could not meet the timescales.

The Homes and Communities Agency shortlisted 270 schemes for the £925 million fund in July. This was part of the Kickstart project to drive house building by injecting funds into regeneration schemes that have been stalled by the economic downturn.

All the money was earmarked for the projects that were originally shortlisted.

But Housing Minister John Healey has announced the final 115 schemes will be funded through the first round of Kickstart, which will receive £389 million between them to deliver just fewer than 9,000 homes. This brings the total allocation for round one to £449m, to fund 11,762 homes.

Housing minister John Healey has announced that 270 development projects, held up because of the credit crunch, have been shortlisted for a share of £925m to get them back on track.

It is hoped the boost will kick-start building work with some 20,000 jobs expected to be created in the process and up to 22,400 new homes built, more than a third of which will be “affordable”.

The Government expects almost half the money to be repaid within five years, over one third will go to housing associations and others to help them manage the affordable housing and less than one fifth (18 per cent) consists of direct grant to support developers.

Mr Healey said he wanted to see the first builders back on site in a matter of weeks and will call on successful developers to pull out all the stops so construction can restart as quickly as possible.

Cuts in existing schemes, including the Decent Homes initiative, will be made to cover the costs of the Government’s new £1.5bn investment in building affordable housing.

The Communities and Local Government Department has confirmed that funding will be taken from its growth fund, Decent Homes, and private sector renewal programmes to finance the Building Britain’s Future Pledge, unveiled by the Prime Minister.

Other departments, including Business; Innovation and Skills; Transport; Children, Schools and Families, the Home Office and Health will also be expected to release £930m for the Building scheme.

The government has reduced its target for new social housing to 110,000 homes over the next two years, despite pumping £1.5billion into building 30,000 homes.

In 2007, the government had originally pledged to build 70,000 homes a year by 2010/11, which means there is now an annual shortfall of 10,000 affordable homes.

The target reduction has been blamed on a loss of cross-subsidy from private schemes and a weak funding market for developers.

Of the £1.5billion of new funding, £750million will be used to build 12,500 social homes through RSLs, ALMOs and housebuilders.  £500million will go to the Kickstart programme for unlocking stalled regeneration sites and £250million will be used to deliver 3,000 more council homes through direct development.

An extra 20,000 affordable homes are set to be built over the next two years on top of the 90,000 already in the pipeline, after the government pledged £2.1billion of funding for the construction of new local authority and housing association homes.

This is three times the £600million announced in the last budget and the additional £1.5billion will come from the Department of Communities and Local Government, and other parts of Whitehall.

It is hoped that the building of 110,000 new homes will enable councils to give priority to local residents who have been on the social housing waiting list for some time.