The Department for Communities and Local Government is to establish the privately-funded Housing Finance Institute.

This body will aim to address a skills and knowledge gap within local authority housing departments.

In future this will allow councils to set up joint ventures with the private sector and create investment vehicles.

The announcement follows a review into social housing across England.

Chief Secretary to the Treasury Danny Alexander said local authorities needed to deliver more affordable homes.

“This review clearly demonstrated that while local authorities play a key role in meeting housing needs across England, they need more support to help solve the country’s current housing crisis,” he said.

“I have prioritised the investment of almost £2 billion to ensure we can deliver on average 55,000 new affordable homes a year until 2020.”

Housing minister Brandon Lewis added: “By placing housebuilding at the heart of our long-term economic plan, housing starts are now at their highest since 2007 and nearly 217,000 affordable homes have been delivered since 2010.

“And while building by councils is now at a 23-year high, it’s clear they could be doing more. Today’s measure will ensure councils can develop the skills and knowledge they need to invest in building in their area, to deliver the homes their communities want.”

Further details on the scope, duration and governance of the body will be announced later.