The council and private sector partners will form the Sheffield Housing Company, a 50:50 joint venture with the council to regenerate run down areas of the city.

The deal, valued at £273m over its lifetime, is a coup for Keepmoat, which operates Frank Haslam Milan, Bramall Construction and Keepmoat Homes, and represents one of its biggest single house building deals to date.

Eugien Jaruga, partnerships director with Keepmoat, said: “We very much look forward to working with Sheffield City Council in order to deliver homes for sale, shared ownership and rent – helping to regenerate neighbourhoods and restore confidence.”

Councillor Penny Baker, Sheffield City Council’s cabinet member for housing, regeneration and planning, said: “We are excited to announce our preferred partners in the Sheffield Housing Company.

“Even in the challenging financial climate we’re all facing at the moment, we are coming up with innovative ways to make sure the regeneration of our city goes from strength to strength.”

She added: “These homes will be built in areas where regeneration is needed most, and will have the added effect of stimulating the local economies with labour initiatives, training schemes and support for small, medium and community enterprises.”