Around 5,000 NHS nurses hit by the property price boom are to be offered cheap housing and interest-free loans under the£250m Start Homes Initiative Transport, local government and the regions secretary Stephen Byers announced details of the long-awaited scheme aimed at tackling the recruitment and retention crisis among Britain's key workers.

He said£230m will be spent on 95 schemes offering shared ownership or interest-free loans. Around 4,000 nurses and healthcare workers, 2,800 teachers and 900 police officers will benefit.

With London-based staff facing particular problems in finding cheap accommodation, the capital will absorb 63 per cent of the funding. The South East will receive 28 per cent, and 9 per cent will go to Eastern and South West regions.

Bids for the Starter Home Initiative over the past six months were assessed in conjunction with the Housing Corporation.

Most will be run by registered social landlords, but schemes run by private developers have also been approved by the DTLR.

A further£20m has been reserved for interest-free equity loans of£10,000 which are expected to help 2,000 key workers outside London - 1,000 of them nurses and healthcare workers.

Mr Byers said that changes to planning guidance could be made to bring back empty properties.

A consultation document on planning obligations will be published later this year.

He claimed that there were 30,000 privately owned long-term empty properties in London.

'The need for affordable housing is a growing issue, so I want to look afresh at our planning guidance, ' he said.

NHS Confederation policy manager Alistair Henderson said:

'This is a welcome step - the fact that the government is moving to sort out this problem.'