The house builder will be spun out of the main Miller Group, which will continue to run its mining and development business under chief executive officer Keith Miller.

Miller Homes will sell at least 40% of its shares on the open market, hoping to raise £140m to reduce debt and fund growth.

It is understood a flotation is being targeted for late October/early November with the hope of valuing the publicly-listed house builder at around £450m.

Miller Homes’ board believes there is scope to raise completions from around 1,700 a year to 2,750 with very little impact on existing overhead levels.

The Miller Group completed a £160m refinancing deal in March 2012 with US investment giant Blackstone, which took a majority stake in the firm.

Since then the house building arm has been able to invest in land and restored margins to 11.5% this year.

In the first half of this year, the housing business delivered a £19m operating profit on sales of nearly £170m.

Keith Miller completed the sales of Miller Group’s loss-making construction business this summer,setting the stage for the homes arm to be floated.

Chris Endsor, chief executive officer of Miller Homes, said: “Our distinctive focus and deep knowledge of the regions in which we operate, together with our large and well-located strategic land bank, position Miller Homes to drive strong and sustainable growth and to benefit from the continued recovery in these regional markets.

“It is an excellent time to be operating in the house building sector, with demand for new housing continuing to grow supported by improving macroeconomic conditions and mortgage market and a more favourable planning environment.

“We are proud of what we have achieved so far and look forward to developing our business and creating value for our new stakeholders as a publicly listed company.”

Miller Homes was founded in Edinburgh in 1934 as part of James Miller and Partners.

In the late 1990s and 2000s, Miller Homes acquired several smaller house builders to expand the business.

This included the acquisition of Cussins Homes in 1999, Birch Homes and the Yorkshire region of Crest Nicholson both in 2000, and the purchase of Fairclough Homes in 2005.

By 2006 Miller Homes was delivering 3,960 units per annum from nine operating regions.

But the 2008 housing crash forced the parent group to recapitalise two years ago, attracting new equity investment.

This allowed Miller Homes to recommence land acquisitions and build up a land bank of 9,000 consented plots and strategic land of 16,500 plots..