Andy Kerr (left) and his deputy Tavish Scott

Finance Minister Andy Kerr said health, universities and transport would all see big spending increases over the next three years.

He said overall spending would rise from �25bn now to �30bn in 2007-08.

Mr Kerr also said a drive to root out waste was scheduled to deliver savings of �1bn by 2010.

But while there were beneficiaries, Scotland's councils said they feared they were getting "standstill" funding.

Mr Kerr praised councils as "vital partners" and promised to increase their grant from government by almost 10% by 2008.

It works out at roughly 700-750 extra homes a year...and we need an extra 5,000 homes a year Alan Hogarth Chartered Institute of Housing

While commending other spending proposals, local government organisation Cosla described that as "very disappointing".

Cosla president Pat Watters said: "There is going to be a very tight spending round for local government. We could be lucky to get to a standstill situation."

Mr Kerr announced that extra funding would be made available to Scottish universities to offset the increases English institutions will see in top-up tuition fees.

He said spending by the Scottish Higher Education Funding Council will rise from �787m next year and top the �1bn mark by 2007-2008.

Sir Alan Langlands, chairman of Universities Scotland Funding Policy Group, said: "The outcome of the spending review is very positive for universities and we warmly welcome the increase in resources.

"The new money will help us follow through on our plans to improve the facilities available to our students and to maintain the competitiveness of our research."

Alan Hogarth wanted more for businesses

David Bleiman, of the Association of University Teachers, said: "Scottish universities can now go full speed ahead with the urgent pay modernisation project which is being implemented in partnership with the unions."

Mr Kerr said he would continue to ensure business rates rise by no more than the rate of inflation and he doubled the budget for new air routes but Alan Hogarth, of CBI Scotland, said the plans were a missed opportunity for business.

He said: "He (Mr Kerr) could have taken action to reduce costs on business. Businesses pay more than those south of the border."

Alan Ferguson, of the Chartered Institute of Housing, said the �100m extra investment in affordable housing was welcome, but did not go far enough.