Demand to build council homes is far exceeding government expectations, putting pressure on the Treasury to release extra cash as part of the spending review next month.
The pressure amounts to an end to the 20-year effective moratorium on council house building, amid a new cross-party consensus to build council homes.
Nearly 90 local authorities, including large Conservative ones such as Birmingham, have bid to build a further 3,500 council homes as soon as possible.
The Department for Communities and Local Government (CLG) had planned and budgeted for a demand to build 1,200 homes.
The bids come on top of 49 councils that were given the go-ahead by CLG in the summer to build 2,200 homes on the condition that they were on site by March next year.
The unexpectedly large number of local authorities bidding in the second round represents the largest potential council house building programme in more than two decades.