The funding is intended to accelerate the delivery of up to 800,000 new homes and infrastructure across England, as part of a wider package of measures to tackle the lack of housing stock in local areas.
Councils will be able to bid for a share of the fund to tackle planning issues, which has been found to hinder the construction of new homes and slow down the process.
Housing minister, Gavin Barwell, said: “We want to turbo-charge house building on large sites to get the homes built in the places people want to live, so that this country works for everyone, not just the privileged few.”
As part of the funding, six new housing zones will be created that will support the development of 10,000 new homes. They include South Yorkshire, North East Lincolnshire, Sandwell, Pennine – Lancashire and Merseyside.
The six housing zones will join the existing 26 across the UK, which help deliver 44,000 homes across the country.
Additionally, developers will be able to apply for funding from the Home Building Fund, which has allocated £3bn available to house builders.
Barwell said both the funding and the six new housing zones offer “enormous potential to transform derelict brownfield land into new homes and enables developers to get them built much sooner.”