The funding will only be released for development on sites that will deliver in this Parliament, getting spades in the ground quickly to build homes in places such as Manchester and Liverpool.

This means construction must start before March 2027, with an aim to finish building by 2029.

It is being released to avoid a cliff edge in delivery of new homes, ahead of the next funding programme being announced following the current Spending Review process, which will see Government in June set out plans for further long-term investment in social housing.

Chancellor of the Exchequer Rachel Reeves said: “We are fixing the housing crisis in this country with the biggest boost in social and affordable housebuilding in a generation. Today’s announcement will help drive growth through our Plan for Change by delivering up to 18,000 new homes, as well as jobs and opportunities, getting more money into working people’s pockets.”

David Thomas, CEO at Barratt Redrow, said: “To increase construction activity and build the homes the UK desperately needs, we need support for demand across all tenures.

“As well as providing more much-needed affordable homes, this welcome investment will help unlock mixed-tenure developments and to create jobs and economic growth across the country.”

Olivia Harris, chief executive of key worker housing specialist Dolphin Living, said: “This additional funding is very much welcome and needed especially given the huge viability challenges many affordable housing developers are facing which is stymying the delivery of much-needed new housing.

“This is especially so in place like London where start-on-sites are at near record lows while demand continues to accelerate away.

“However, if the government really wants to rapidly increase supply, then we also need to have a serious debate on affordable tenure and in some cases switch to intermediate affordable housing, in addition to this extra funding, to really start getting those affordable housing consents converted into building activity.”