The builder, ilke Homes, manufactures energy efficient homes using a combination of offsite and onsite construction.
Housing minister Esther McVey (pictured) announced the initiative saying it would contribute to a new construction corridor in the North of England and help position the region as a world-leader in construction of green homes.
“The North of England has the potential to lead the world in modern methods of construction. This investment is a step forward in developing a construction corridor,” McVey said.
“It’s vital we invest in new technology to get Britain building. Homes built using modern methods can be of higher quality, greener and built to last,” she said.
The money will be allocated from Homes England’s existing £4.5 billion Home Building Fund and represents 0.7 per cent of that budget.
The government claimed “when matured”, the green homes industry would be worth £40 billion a year and provide up to 80,000 jobs in the UK.
The investment was expected to boost output at the Yorkshire factory to 500,000 homes a year.
The homes were said to be “100 per cent more energy efficient” and to “halve energy costs” compared to the average UK home.