Local governments must ensure money is made available for cheap housing projects through budgetary spending, returns from land sales, and proceeds from local bond issuance, the Ministry of Finance said on Sunday.

Local governments must provide cheap loans for companies involved in public housing projects by subsidising their interest payments, the ministry said.

The ministry did not specify the amount of subsidies available to developers.

Local governments must set aside no less than 10 percent of the proceeds from their land sales to fund housing projects, the ministry said.

The central government will also step up its crackdown on the misuse of funds intended for the low-cost housing scheme, it added.

Funding shortages and mismanagement have dogged Beijing's ambitious $800 billion plan to build 36 million government-subsidised homes for low-income families between 2011 and 2015.

Many investors see China's public housing programme as key to its economic health, and they hope widespread building of affordable homes counterbalance falling private sector development while the pace of economic growth slows.

Center>Copyright Reuters, 2013