The council says key workers are being forced out

Under the scheme, South Hams District Council will work with social landlords to create over 260 new affordable homes across the district over the next two years.

Sites in property hot spots such as Salcombe, Kingsbridge and East Allington have already been earmarked to benefit.

However, the scheme is dependent on Devon County Council agreeing to give back the lion's share of money raised by cutting second home council tax discounts.

The county council has not specified how it plans to spend the �1.6m annual windfall it will receive from South Hams.

�16m pledge

South Hams, which wants 100% of the extra cash to make the project successful, has been meeting Devon County Council leaders to reach a deal.

The council says it has pledges of �16m from housing associations and private funding, more than �3m from the Housing Corporation, and potentially �6.5m from the district council, of which �4m would be the additional money generated from council tax on second homes.

Isabelle Steer, executive member for housing, said: "This is the largest affordable housing scheme in Devon at this time, but we are relying on the county council to give it the support it needs, and the people of the South Hams deserve."

House prices on average exceed �220,000 in the South Hams, while local workers are paid an annual average salary of about �15,000.

In Cornwall, the county council has offered 75% of the extra cash from cutting second home council tax discounts, but two district councils are holding out for 100%.