Chancellor Gordon Brown's Comprehensive Spending Review allocated �4.4bn extra in the next three years in the expectation that more than a million homes will be renovated.

Of this, �3.6bn is being released by Mr Brown from council house sales.

Housing Minister Hilary Armstrong and Regeneration Minister Richard Caborn outlined on Tuesday afternoon how the money will be spent on regenerating the worst neighbourhoods and improving the social housing stock.

A new housing inspectorate is being established to ensure council housing is properly managed and maintained.

There will also be more links between housing and regeneration programmes.

'Spending binge'

The opposition Conservative Party accuses the government of letting councils loose on a damaging "spending binge" and of failing to put its own house in order.

Tory housing and local government spokesman Tim Yeo said that letting councils spend capital receipts would push up debts and council taxes and said the policy would hinder Britain's towns and cities.