Yvette Cooper, the Housing Minister, will announce an ambitious £500 million package today to fast-track house building for first-time buyers and young families.

Ms Cooper will propose financial incentives for town halls that increase development targets, identify new land for housing and produce plans to speed up delivery.

She will argue that many councils are failing to be proactive in identifying sites for new homes and need “to raise their game”. This year Gordon Brown announced his intention to build three million homes by 2020 but several organisations were sceptical about whether the programme could be achieved in time, due to a shortage of sites.

Under Ms Cooper’s scheme, councils will be required to identify at least five years’ worth of sites ready for housing and a further ten years’ worth for future development.

The grants will be targeted at areas where there is a shortage of housing such as the South East. This will include four existing major growth areas — Ashford; Thames Gateway; London, Stansted, Cambridge and Peterborough; and Milton Keynes and the South Midlands. An additional 49 towns and cities that have already proposed extensive housing growth, including areas in the North, are expected to bid for the cash.

But councils increasing the pace of development may face a public backlash from local residents. Many councils have been accused of dragging their feet over planning applications and appeals and will now be under pressure to speed them up. Ms Cooper will also disclose that a further 200 brownfield public sector sites have been identified, on top of the 500,000 already identified by Gordon Brown.

More than 150 organisations, including green groups and councils have now signed up to a new partnership to build 240,000 zero-carbon homes a year by 2016, but Ms Cooper will urge more to get involved.

Ian Fletcher, director for residential policy at the British Property Federation, said that it was not surprising that ministers were providing councils with the carrot of funding.

“Many councils have already accepted the compelling case that with 1.6 million on council waiting lists and supply falling short by 60,000 or so households a year, we need more homes,” Mr Fletcher said. “We hope this will stimulate even more to consider increasing the land they identify for housing development.”

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