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Larger developing housing associations are set to effectively become developers under plans being considered by the Housing Corporation.

The aim is to squeeze as many homes as possible from registered social landlords.

Small- and medium-sized RSLs have taken umbrage at the proposals, claiming they are just as efficient as their larger counterparts. But housebuilders welcomed the idea.

In a discussion paper called Partnering Through the ADP, the Corporation outlined plans to streamline the provision of approved development programme funds to a limited number of larger, developing RSLs. This will leave those smaller developing associations that carry out a large proportion of current social housebuilding with just a landlord function.

Their former role would be performed by larger RSLs such as the Peabody Trust and Genesis Housing Group, in partnership with construction and maintenance firms like Willmott Dixon.

Housing minister Lord Rooker is understood to be interested in RSLs working together on developments to drive construction costs down.

Corporation assistant chief executive Neil Hadden said: "There are two main reasons for doing this. The first is a belief that we need to radically rethink how to get the most cost-efficiency from the ADP.

"The second is that we need to ensure resources are allocated to the best-performing RSLs."

We need to ensure that resources go to the best-performing RSLs

Neil Hadden, Housing Corporation

He said the precise number of housing associations that would be allowed to bid for development funding under the proposals had not been determined, but that it would be a "natural process of selection".

Hadden hopes to have up to 10 pilot schemes operating under the new system by this time next year. Areas earmarked for extra housing cash by deputy prime minister John Prescott last week are most likely to see pilots.

"If we are targeting government funding at areas like Ashford around London then this is where the pilot schemes will probably go," Hadden explained.

Although welcomed by larger, developing housing associations such as Circle 33, smaller RSLs will inevitably lose out.

Steve Boyd, chief executive of Nomad Housing Association in Newcastle-upon-Tyne, said: "What's the reason behind this? We are big enough and have good relations with local authorities and are often able to move much more quickly than the big nationals."

The construction industry, however, is set to benefit from larger contracts as a result of the proposals and was unsympathetic to smaller RSLs.

A House Builders Federation spokesman said: "We welcome the idea.