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The Treasury is planning to salvage the flagging popularity of the private finance initiative in housing by making it quicker and cheaper.

It wants to use long-term partnering arrangements in PFI to cut out complex and costly bidding processes. Such a system has been used successfully in the health sector.

Speaking at a conference in London on Tuesday, Paul Boateng, chief secretary to the Treasury, said: "Improved models like NHS local improvement finance trusts are being developed all the time … by 2005, we expect to have signed PFI projects worth a further £9bn in health, education and housing alone.

"We are pursuing new opportunities to extend the involvement of the private sector on other [areas] such as urban regeneration."

Current PFI contracts involve complex negotiations between private sector bidders and local authorities about a specific project.

The NHS LIFT model differs as the primary care trust will invite tenders from long-term partners. Once the partner is in place, talks begin about actual projects.

A Treasury spokesman said that public-private partnership body PUK would be responsible for working to boost the use of PFI using the model. "PUK's role is to extend the use of joint ventures in PFI – for example NHS LIFT. It could well be that in time we se this model taken forward into areas like housing."

He added that work was continuing in this area, but said that the main areas PUK looked at were likely to include unemployment and regeneration.

We are pursuing new opportunities to extend the involvement of the private sector in regeneration

Paul Boateng, chief secretary to the Treasury

The use of PFI in housing has been troubled since the eight pathfinder projects were announced in 1999. Since then only two have signed contracts – Islington, north London and Plymouth Grove, Manchester.

The government has made £1.4bn available to be spent on PFI in housing. This includes £685m announced in the Communities Plan.

David Hartshorne, director at PFI bidder Equion, said: "The thrust of the NHS LIFT model is not just new buildings but community involvement – this could well include housing at some stage. We have been meeting with government and have been trying to push our vision for the LIFT model as something that will broaden the appeal and use of PFI."

Equion is a preferred bidder in two of the NHS LIFT schemes – in Manchester and Sandwell – and is bidding in a further two.

Hartshorne said that the principal benefit of this model of PFI over that presently used in housing was that procurement times were much shorter. Equion is aiming to start building in Manchester 15 months after it began negotiating.

Brian Queen, a housing consultant, said: "PFI to date has a credibility gap with local communities and this move would likely complicate matters rather than encourage the community involvement that is intended."