The Homes and Communities Agency has shortlisted 40 firms for its delivery partner framework - 16 of which are traditional contractors.
The framework, which includes the Public Land Initiative, attracted 132 bidders.
The PLI is designed to take the risk of land ownership away from development by providing public land for developers, and was partly aimed at coaxing traditional contractors into the housebuilding arena.
Sixteen of the shortlisted companies – more than a third – are construction firms looking to expand into housing development; 13 are traditional housing developers, six are firms with both construction and development capacity, four are housing associations and one is a consultant-led consortium.
Housing minister John Healey said traditional contractors would inject much needed competition and impetus into the sector.
He said: “I’m offering a New Deal for public-private housebuilding – new partnership terms in which government takes more risk out of development, and companies take a smaller profit in return.
“We can bring in construction companies new to housebuilding, who are builders not developers and used to contractor margins of six or seven per cent rather than the 15-20 per cent norm for traditional housebuilding firms.
“This will rebalance profit margins to a third of the traditional housebuilding model by taking site costs and risk out of new housebuilding.”