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Four housing associations in Cornwall and Somerset are teaming up to enlarge the market for off-site manufactured housing.

Ocean, Devon and Cornwall, North Devon and South Somerset associations hope their combined demand for prefab homes will allow a local factory to expand its production.

They have shortlisted three unnamed local manufacturers and will choose one by next spring. Using a local manufacturer will save transport costs and environmental damage.

Teresa Butchers, chief executive of Devon and Cornwall Housing Association, said: "The aim is that if there are enough people in the partnership and we have enough certainty from the Housing Corporation about future funding, we can provide certainty to a local manufacturer that would allow them to grow their production.

"Ideally, we would be looking for five years of future funding but if we had two years of certain funding with indication of a further three we would take some comfort." They would bid this year and build up to major production for 2005/06.

The partnership does not yet know how many units it will build – this depends on Housing Corporation funding and the capacity of the suppliers.

Meanwhile, Kelsey Housing Association in Kent is to buy timber-frame homes from Canada. The association chose a system made by Canadian firm Alouette Homes for its energy efficiency. The homes, which have been used on private sector developments in the UK, are triple-glazed and lose one-eighth of the air leaked from average dwellings.

Kelsey will begin with a pilot project of nine homes in Bognor Regis in Sussex. The association, which is working with construction firm Osborne, will look at the suitability of the Canadian system for social housing. Kelsey will also compare the heating and maintenance costs of the houses with traditionally built homes on the same site.

Off-site manufacturer Space4 has won Contract Journal's Construction Product Manufacturer of the Year award.