City asks SNP for £350m for 2500 new homes

The money would allow the local authority to buy more than 60 acres of land, on which an extra 2500 homes could be built.

The moves comes a day after the city's affordable housing crisis was brought into sharp focus, with the news more than 1000 people have put in bids to rent a single council house.

The two-bedroom property in Drumbrae has attracted a record 1024 individual bidders.

The council estimates around 6000 new affordable properties - classified as within the reach of people on modest incomes for rent or purchase - are needed over the next five years. It is hoped many of the properties will be built through a policy that requires 25 per cent of new developments to be affordable.

But a range of measures to boost the number of homes is still likely to result in just 3500 new properties over the five-year period.

So the local authority is set to ask for a further 350m from the Government to establish a "community land bank".

Councillor Paul Edie, the city's housing leader, said: "Edinburgh has the greatest shortage of affordable homes in Scotland and we need 12,000 new ones over the next ten years.

"Previous governments have funded new homes in areas of the country where there has been a surplus of affordable housing. This pattern of investment is not sustainable when the shortage of affordable housing remains mostly in Edinburgh and the south east.

"In addition, the cost of purchasing the land to develop is a major difficulty the council faces in its attempt to build more affordable homes.

"Resources for a community land bank would allow the council to buy land and help pay for the infrastructure often required before new homes can be built.

"Currently around 2000 new homes are built in the city each year. However, many of these are at prices most working families simply can't afford."

The Scottish Government already provides funding to housing associations through an affordable housing investment programme - which the council says needs to increase from 36.1m to 43.8m by next year, and continue rising.

Council officials, who have produced a new report for the Scottish Government outlining the city's requirements, also believe money can be found through various grants and the private sector. This results in a total of around 480m - enough for 3500 homes. The extra 350m would take this figure to 6000.

A Scottish Government spokesman said: "Communities Scotland looks forward to receiving the City of Edinburgh Council's first strategic housing investment plan, which will be helpful in informing the government's housing investment programme allocations from 2009-10 onwards.

"Ministers expect to announce the housing investment programme allocations for 2008-9 in the early part of next year."