Greig Watson BBC News, Lincoln

Council houses have been demonised say supporters

But finding hundreds of homes, in the face of local opposition and soaring costs, is the task facing most local authorities as waiting lists spiral.

So some councils are turning to a solution which had become almost extinct - the council house.

Hailed as cost-effective and flexible by some, they are dismissed as a small scale relic by the establishment.

The dusty world of the council home was turned upside down in the 1980s as the Thatcherite 'Right to Buy' was imposed.

We would be able to build 30% cheaper than the housing associations Gary Porter, South Holland District Council

Viewing property ownership as a building block of prosperity, it allowed tenants to buy their homes, usually at prices far lower than the market rate.

In a double blow, it also restricted the ability of councils to replace lost stock by giving the revenue from the sales to central government.

The task of building low-cost housing was handed to the Housing Corporation, which in turn used Housing Associations and private landlords.

The number of households currently waiting for a home on housing registers is more than 1.5m, a rise of nearly 50% since 2000.

Between 2004-2006, the Housing Corporation received funding to build 63,000 homes.

South Holland District Council in Lincolnshire has recently built its first council houses in 25 years.

Gary Porter is the council's leader and housing spokesman for the Conservative group on the Local Government Association.

He said: "There were about 100 homes built by councils in Britain last year. In the same period we had a housing shortage of 279 in South Holland alone.

"The fact so few are built is down to lack of funds. Central government gives money for housing to the Housing Corporation, which distributes it to social housing landlords and housing associations.

"But clearly this isn't working, they can't keep up with demand and the Housing Corporation costs �26m a year to run, money that could be spent on construction.

The private sector solution has been discredited Alan Walter, Defend Council Housing

"If local councils were able to put the money into development, we would be able to build 30% cheaper than the housing associations."

Alan Walter, chairman of campaign group Defend Council Housing, said: "Successive governments have demonised council housing, pointing to crumbling tower blocks and crime-ridden estates - as if private ownership has ever solved these problems.

"The truth is council houses served generations of people well and, if given decent government funding, can do for future generations.

"At the moment all the money from rents, right to buy and stock transfer go to central government. The government gives funding to the housing corporation and the housing associations who, in turn, employ social house builders.

"But now the big builders, like Barratt and Wimpey have got a slice of the pie.

"The job of building decent, affordable and accountable housing should be given to councils who have the experience, the local knowledge and are accountable to the tenants, not by multi-million pound businesses out to make a profit.

There will be no return to the bad old days of local authorities being given large amounts of money for housing and left to it Government spokesman

"We have record numbers of people in temporary housing. At a time when the housing crisis is beginning to bite, it is obvious the private sector solution has been discredited."

The Department for Communities and Local Government, successor to the Office of the Deputy Prime Minster, is currently conducting a review of housing and regeneration provision to "meet new challenges".

But a spokesman insisted this does not signal a return to the classic council house.

He said: "There will be no return to the bad old days of local authorities being given large amounts of money for housing and left to it.

"The best way to provide affordable housing is to use the expertise and experience of a wide variety of agencies, both public and private, to come up with diverse and innovative solutions.

"If there are concerns that not enough family accommodation is being built then it is within the powers of the planning authority to insist on more being included in developments."

A spokesman for the Housing Corporation said: "Getting enough affordable housing is about investment.

"The 2006-2008 period will see the Housing Corporation's biggest ever investment programme of �3.9 billion, funding 84,000 homes, 49,000 of these will be for affordable rent and 35,000 will be for affordable sale through the government's new HomeBuy initiative.