The 2008-09 Housing and Planning Delivery Grant will provide top up funding top for councils to ensure that new homes are built where families need them.
The policy is part of a series of measures the Government has announced recently to alleviate the current challenges in the housing market and give the house building industry greater certainty around development proposals.
This new incentive is designed to ensure that councils are act now. Those rewarded Councils can decide locally how best to spend this extra funding.
Housing Minister Margaret Beckett said: "We are determined to continue to do everything possible to ensure long-term fairness in the housing market all across the country - including providing more affordable homes we still need.
"The international credit crunch has created significant challenges for the UK but we have a growing and ageing population and the long term need to provide more homes has not gone away."
"The allocation of £101m will go a long way to ensuring councils and builders are ready to take advantage when the upturn in the economy comes."
In order to be eligible local authorities must show they are continuing to provide suitable land for development over future years, providing the local plans necessary to deliver the needed homes and are carrying out a strategic assessment of their housing market.