More than £6.5bn will be spent on social housing and at least £8bn on affordable homes over the next three years if proposals in the government’s Housing Green Paper published on Monday are implemented.

The paper – Homes for the future: more affordable, more sustainable – unveiled by housing minister Yvette Cooper sets out plans to build three million new homes by 2020 and at least 70,000 affordable houses by 2011 in a bid to address the UK’s housing crisis.

In a measure seen as ‘interventionist’ the government plans to institute a ‘housing and planning delivery grant’ to reward local councils that meet a housing targets with extra funding and penalize councils that have not identified at least five years worth of available sites for housing.

She said ‘action will be taken against’ councils that are not meeting housing targets including forcing through housing planning applications and warned local developers that ‘tougher action will be taken where private developers do not deliver on agreed goals’. However it is thought the government will wait for the Callcutt and Office of Fair Trading reviews before making any decision on this issue.

The government also set a target of 25,000 shared equity and shared ownership homes to be funded by the Housing Corporation with additional funding to be set out in the Comprehensive Spending Review later this year. At the same time it plans to conduct a review of privately-financed shared equity schemes and first-time buyers will be offered a 17.5% Government equity loan.

In a week when the UK has been dealing with severe flooding Cooper warned that this should not be used to ‘whip up hostility’ to new house building. She said 10% of England’s houses are already located in flood risk areas and it would be ‘unrealistic’ to prevent all development within these risk areas.

Other proposals include: intervention to secure greater section 106 contributions in ‘northern areas of the country; a partial reviews of regional plans to increase regional and local targets; reviews of Regional Spatial Strategies to be carried out by 2011 to reflect plans for 240,000 homes a year by 2016.

The British Property Federation said it welcomed extra funding for social housing in today’s housing Green paper, but expressed dismay over ‘a lack of any focus on the private rented sector, or much less, a real solution to the crisis’.

Ian Fletcher, director for residential policy, said: ‘While it is clear that any additional funding will ultimately put a roof over someone’s head and the government has finally grasped the initiative to do something, this new funding will not reach full effect until sometime into the next decade. And even then it will still struggle to meet demand.’