The Audit Commission says more money should go on renovations
Ministers have given the go-ahead for 2,000 council houses to be built across England - as a report says there is too much emphasis on building new homes.
The project, covering 47 areas, is being described as the biggest of its kind over the past 20 years.
Most social housing is now built by housing associations, responsible for almost 40,000 properties last year.
However, spending watchdog the Audit Commission has called for more focus on maintaining existing homes.
The government has announced 12 council housing projects in the Midlands, seven in the North West, six in London, six in Yorkshire and Humber, six in the South West, five in the North East, four in the South East and one in eastern England.
Housing minister John Healey said: "We have committed to use the power of government investment to help Britain through the recession.
"The boost for affordable housing will help build the homes we need and it's also a shot in the arm for the construction industry, creating over 5,000 jobs."
We reject any claims that there is too much emphasis on new house building
Department for Communities and Local Government
But the Audit Commission report says there is too much emphasis on new building and that councils could do more to improve health and educational achievement by improving existing stock.
For instance, spending £2,000 on adaptations to help an elderly person stay in their home could save £6,000 a year in care costs, it argues.
Audit Commission chairman Michael O'Higgins said: "Councils aspire to shape the communities in their area for the better.
"In tougher times, it is all the more important that councils think strategically and creatively about housing and take their housing responsibilities seriously."
For the Conservatives, shadow housing minister Grant Shapps said: "There is a powerful financial and environmental case for renovating rather than demolishing rundown housing stock.
"Yet the government's flawed Pathfinder scheme is forcing councils to let rip with the wrecking ball, razing Victorian terraces and wiping out a valuable part of our local heritage."
And the Lib Dems said government policies had restricted the amount of money available for council house refurbishment.
"The Treasury has raided council tenants' rent and the Decent Homes budget, denying councils the money they desperately need to improve local housing," the party's housing spokeswoman Sarah Teather said.
A Department for Communities and Local Government spokeswoman said: "Now is exactly the right time to focus on building new homes, and we reject any claims that there is too much emphasis on new house building.
"In a recession, this is more important than ever both to meet the country's long-term housing needs, to support the construction industry and create jobs."
In March the National Housing Federation predicted that an extra 200,000 families would join waiting lists for accommodation over the following two years, pushing the total to around two million.
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