The government will give cash rewards to local authorities that allow new homes to be built in their areas, the housing minister announced on Friday, in a move welcomed by building firms.
Grant Shapps said the government had set aside almost 1 billion pounds for councils that welcomed new housing development, which they would be able to spend to benefit their local communities.
Britain is experiencing an acute shortage of housing especially for families on lower incomes, but many communities oppose house building in their areas to avoid overcrowding.
"Local communities will now have a reason to say yes to new homes, because they will benefit from better local services, or perhaps the redevelopment of their town centre in return for backing new housing," Shapps said.
The Executive Chairman of the Home Builders Federation, Stewart Baseley, said: "The country is facing an acute housing crisis and it is imperative we have a planning system that delivers sufficient land for the homes we need.
"The new homes bonus is an essential part of the new incentive based structure and we welcome the commitment to a simple, easy to understand system."
Housing groups welcomed the bonus scheme.
"The new homes bonus sends a clear signal that those communities accepting desperately needed housing will be rewarded," Liz Peace, chief executive of the British Property Federation, the housing industry group, said in a statement.
The government said councils and communities would work together to decide how to spend the bonus, whether on local tax discounts for residents, on boosting services such as rubbish collection or by providing gym facilities in their areas.