Local authorities can apply for a share of £180m to develop brownfield sites for housing.
The Brownfield Land Release Fund 2 has been set up by the Department for Levelling Up, Housing and Communities (DLUHC) to help prepare disused urban areas for 17,600 new homes, as well as creating 54,000 jobs over the next four years.
Initially, £40m is available to support local regeneration projects, which the department said will release council land for about 4,000 new homes.
It will fund small-scale infrastructure and remediation work so homes can be built on council-owned sites.
The remaining £140m of the fund will be made available to councils over the next two years.
Minister for Government Efficiency Jacob Rees-Mogg said: “Opening up this land is a fantastic opportunity for regeneration, improving government efficiency and playing a vital role in tackling the housing shortage while increasing homeownership.
“This will provide a boost to the economy, foster the creation of thousands of jobs, and it is also the opportunity to convert derelict and unloved land into beautiful new hamlets or villages, which will give many young families their first step on the housing ladder.”
Money from the first Brownfield Land Release Fund (£77m) went to councils to prepare brownfield sites for 7,750 homes.
As with the previous scheme, the new fund will be delivered through the One Public Estate partnership between DLUHC, the Office of Government Property and the Local Government Association.