The Scottish Government and COSLA have pledged to ensure that support is focused on councils that are best placed to deliver much needed new homes quickly.
The measures will increase the supply of affordable housing, a key theme of the Scottish Government's economic recovery plan to help households through the current economic downturn.
It has already committed to introduce legislation to end 'Right to Buy' on all new build social housing to encourage more council house building.
Minister for Communities and Sport, Stewart Maxwell, said local authorities now have the opportunity to apply for funding that will help them reverse decades of decline in Council house building.
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"Only six new Council houses were completed under the previous administration. Since May 2007 a number of local authorities have said they are keen to kickstart a new era of building affordable homes.
"Taking decisive action on housing and encouraging development are key themes of our Economic Recovery Plan. Coupled with our commitment to end Right to Buy on new build social housing, this major investment will help boost supply and generate a new generation of Council house building in Scotland."
COSLA's Community Wellbeing and Safety Spokesperson, Councillor Harry McGuigan, said:"In this current economic climate it is imperative that we address the affordable housing needs of our local communities.
"COSLA welcomes the investment of 25 million pounds to encourage new Council house building. This policy initiative is a step towards re-affirming councils as housing providers and developers."
Cabinet Secretary for Health and Wellbeing, Nicola Sturgeon, announced in April 2008 that the Scottish Government will provide £25m to encourage councils to use their resources to build new houses.
Agreement has been reached with COSLA on the approach to encouraging council house building, including the criteria that will be used to ensure that the £25m is focused on councils with housing need and the resources to take forward projects in the near future. The funding is aimed at encouraging councils to use their prudential borrowing capacity or other resources to build new homes.
(GK/KMcA)
