Funding for the eco-towns programme has been cut by 50%, housing minister Grant Shapps has told councils.
The previous government had pledged funding of £60M to build 10,000 green homes by 2016 in four already approved eco-towns in February.
An additional £10M was put forward for a second wave of the homes in March to see if it was possible to get proposals to meet Planning Policy Statements (PPS) standards and put them through planning.
However, Mr Shapps has informed councils that the payments will be cut by 50% and that his priority is to ensure that plans are well supported locally and will achieve genuine improvements in sustainability.
A Communities and Local Government spokesperson said: “Housing minister Grant Shapps wrote to council Leaders engaged in the eco-towns programme on 2 July.
“Eco-town funding awards for 2010/11 will be reduced by 50% and before releasing funding the minister has asked councils to provide details about their programmes − an update on their plans and how they will engage the community on the development.
“While there has been a 50% cut in Eco-town funding awards for 2010/11, this still provides a good level of start up funding for these projects in the current circumstances.”