The figure, announced in this week's comprehensive spending review, aims to ensure that housing developments are accompanied by the schools, transport and other infrastructure needed.
It includes £300 million to continue the existing community infrastructure fund. Funding has increased, from £8.8 billion in 2007-08 to £10 billion in 2010-11.
Plans set out in July's housing green paper to deliver 180,000 new social homes over the next three years were also confirmed.
National Housing Federation chief executive David Orr maintained that the announcement shows that prime minister Gordon Brown "means business".
Chartered Institute of Housing head of policy Merron Simpson said: "We would like to see action in relation to existing housing and the development of sustainable communities."
Campaign to Protect Rural England's Thames Gateway project leader Nigel Kersey said the final settlement for the gateway must not fall below the previous allocation of £850 million. Ministers are expected to publish a delivery plan at the Thames Gateway forum next month.
The government also announced enterprise and renewal funding as part of a £2 billion allocation for neighbourhood and local renewal. But it is unclear how much funding will be available for housing market renewal pathfinders.
A DCLG spokeswoman insisted the CSR had not affected the pathfinders' budget, which is £1.2 billion up to March 2008.
Each pathfinder is required to submit a business plan by early November, the results of which they will hear at the end of the year. The pathfinders last week urged the government to maintain funding levels (Planning, 5 October, p1).
The total budget for the DCLG has increased from £10.3 billion in 2007-08 to £12.1 billion in 2010-11. More than £175 million is allocated to improvements in the planning system, including reforms to the major infrastructure regime, measures to boost councils' planning capacity and sector-led support and strategies to fight climate change.
- Supplementary business rates backed.
- Funding for flooding and coastal erosion to rise from £600 million to £800 million.
- First phase of government funding of £3.6 billion for the 2012 Olympic Games
- £170 million for an environmental transformation fund to commercialise low-carbon technologies.
- The duty on air passengers to be replaced with a tax per plane to take effect from 1 November 2009.