Second round shortlisted schemes will unlock up to 7,000 homes. Developers will now be invited to enter a due diligence process before contracts are signed.

Pat Ritchie, chief executive of the HCA said: “We listened to feedback from the sector and reduced the minimum scheme size to 15, and I’m therefore especially pleased that 20 smaller projects have come forward and the majority of bidders are SMEs.

“These projects must now prove that they can be delivered quickly, provide value for money for the taxpayer and fit with local priorities. As well as building much-needed new homes, the work will create or protect jobs, and boost local economies.”

Round one schemes must complete by December 2014, while round two schemes have until March 2015.

Around £300m of recoverable investment has been allocated to more than 130 projects through the first round, which is expected to unlock up to 9,000 homes.