Social housing group's £1bn plan to bail out housebuilders

Britain’s biggest housing association organisation is in talks with the government to free up £1bn of public funds to rescue housebuilders.

The National Housing Federation (NHF) wants the money to buy tens of thousands of flats and family homes at a heavy discount from struggling housebuilders.

The proposal is under consideration by ministers at the Treasury and the Department for Communities and Local Government and NHF boss David Orr is to meet with housing minister Caroline Flint next week.

The Times reported the move could kickstart the housing industry by buying up to at least 10,000 units.

The money has already been agreed as part of an £8.4bn three-year budget for spending by housing associations between April 2008 and April 2011.

But the newspaper reported the associations have been locked out of the money has housebuilders have stopped building.