A controversial affordable housing development on the edge of the small town of Diss in Norfolk, is set to start next month after the developer received a £3m funding boost from the government. The plans to create more than 100 new homes straddling the boundary of Diss and Roydon were narrowly approved by district councillors last year. Now construction should start in the first week of January on what will form one of the country's largest green and affordable housing projects. The development will create 114 homes - 102 of which will be affordable. Birmingham-based developer Linford C-zero was granted £3m from the Department of Energy and Climate Change (DECC) to build the energy-efficient scheme using a high proportion of organic insulating materials, but the houses will be built on agricultural land at Denmark Lane, which has caused anger among local residents over erosion of the green belt separating the two communities.

Norfolk-based social housing provider Flagship Housing Group has purchased 15 units for its tenants on the estate with the remaining 87 low cost properties available for sale specifically to local people. It is projected that interested parties could purchase a three-bed house for about £99,000 and a two-bed property for £85,000 under the discounted scheme. The remaining 12 dwellings will be sold on the open market.

Funding has been provided under the government's Low Carbon Investment Fund to deliver energy-efficient homes for the future. The first phase, which will be rated four out of six on the sustainable homes scale, is set to be completed by the summer. The company has constructed a demonstration house at the BRE Innovation Park, at Watford, using the same combination of timber and Hemcrete, a mixture of lime and hemp, which creates a high level of insulation combined with low embodied carbon. The buildings also have a low carbon footprint during occupation because they are energy efficient, and by concentrating on reducing the need to use energy, rather than employing bolt-on renewable technologies extra cost can be avoided, making the homes ideal for social housing.

Simon Linford, director of Linford C-zero, said: “The fact that the DECC has decided to allocate over £3m towards the Diss project is a significant endorsement of its belief in Linford C-zero's service offering. As far as we are aware, this is the largest affordable code 4 project so far in the country. We are extremely pleased to have secured such a large investment and we're looking forward to making sustainable homes a reality for the residents of Diss.”

The scheme, which was originally submitted by Hayes Affordable Homes, received objections from Diss Town Council and Roydon Parish Council over the erosion of the greenbelt between the two communities, traffic congestion and pressure on local services.

Martin Aust, Flagship's strategy and development director, added: “The 15 new homes for rent will go some way to address the demand for affordable housing in Diss. Building energy-efficient homes will help our customers reduce their fuel bills and overall will lower the impact of this scheme on the environment.”