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The 94% "no" vote on Tuesday was interpreted by the council as an endorsement of both its stock management and the Scottish Executive's recent go-ahead for prudential borrowing by 2004.

Nearly 60% of the 30,874 postal ballot papers were returned.

Aberdeen council has a low housing debt and a lower-than-average rental income. It had been earmarked as one of the local authorities that could benefit from a prudential borrowing regime.

The extension of the regime to cover housing will allow councils to invest in stock by borrowing money against rent stream income.

Craig Stirrat, Aberdeen council's project manager for housing options, said: "With the ability to borrow money and the tightening up of right-to-buy regulations, we are now looking toward the reality of building general needs housing for the first time in living memory."

We’re looking toward the reality of building general needs housing for the first time in living memory

Craig Stirrat, Aberdeen council

Before the announcement on prudential borrowing, the council faced a choice between transfer of all its stock or stock retention with significant rent increases.

Despite its record of high capital expenditure, consultants have estimated that roughly £600m needs to be spent on the city's housing over the next 30 years, with the bulk of that improvement work to be done within 10 years.

Without the prospect of prudential borrowing, rent rises – of inflation plus 4% for four years, and inflation plus 2% for a further six years – were anticipated.