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Local authorities are set to lose their job as key regeneration funding bodies after the election.

ODPM officials are understood to have been unimpressed with their performance and are leaning towards the idea of giving housing associations a larger role.

Officials are said to have been swayed by arguments put forward by a group of the 15 largest associations in London that they could perform the role of allocating funds and co-ordinating work better than councils.

The G15, as the group is known, is to meet Joe Montgomery, the head of the unit that manages much of the ODPM鈥檚 regeneration spending. 鈥渋n the few weeks after the election鈥�, according to sources. At stake is the 拢38bn that is to be spent on housing and regeneration in the five years to April 2008.

The associations, led by Charlie Adams, chief executive of Hyde Housing Group, are likely to use this meeting to present the successes that associations have had over recent years in upgrading and remodelling estates across England.

Officials are frustrated with the lack of tangible results

Whitehall source

A Whitehall source said: 鈥淎ssociations have been banging at the ODPM鈥檚 door for the past couple of years and the feeling is that local authorities have not been delivering on the regeneration agenda.

鈥淭here is a lot of money involved here and officials are growing frustrated with the lack of tangible results delivered by councils.鈥�

A potential trump card for the associations is that they are able to raise private finance. It is likely that the Treasury would find this attractive as it would make available more funds to be ploughed into renewal projects, such as the nine market renewal pathfinders, without adding to the public sector鈥檚 spending commitments.

The talks come a week after it emerged that the ODPM does not know how much of its 拢50bn annual budget is spent on housing renewal. The department is understood to be tendering for research to find out where the money is spent and what it has achieved.