United Lincolnshire Hospitals NHS Trust has signed a contract with Progress Care Housing Association which will provide and manage the accommodation.

The first units are due to be completed in the summer of 2006, with all work set to finish in August 2008.

The trust said its workers would benefit from a high standard of living.

Bill Millar, the trust's project manager, said: "The scheme is one of the largest construction schemes the Trust has entered into over recent years.

"It will enable the trust to provide a very high standard of accommodation to staff now and into the future."