Shaun LowthorpeHundreds of people living on the edge of Norwich could see their homes given a green makeover after the government agreed to provide up to �16m of funds for an eco-town at Rackheath.Shaun Lowthorpe

Hundreds of people living on the edge of Norwich could see their homes given a green makeover after the government agreed to provide up to �16m of funds for an eco-town at Rackheath.

Housing minister John Healey yesterday said the eco-town project will receive �9.55m of government cash from a �60m pot in the coming year to kickstart the scheme for around 4,150 eco-homes.

Added to that there will be a further contribution of between �2m and �6m in 2010/11 and �400,000 from the Department for Children, Schools and Families.

The project is one of four schemes in the country to get the award and will see 10,000 homes built in Norfolk, Cornwall, Hampshire, and Oxfordshire.

Nearly half of the cash will be used to 'retrofit' existing homes in the Rackheath and also fund a rapid bus rapid transport link into Norwich and cycle routes.

The rest will help pay for a joint sustainable water study with the Environment Agency.

Starting in March a demonstration project of 12 homes will be built to high standards of energy efficiency including a biomass fuelled combined heat and power plant with the potential to sell electricity back to the national grid. An education and visitor centre is also planned.

But the development has sparked angry opposition from nearby communities amid fears the development, which is linked to other proposals in the north-east of the city including thousands of new homes, the Norwich northern bypass, and the Postwick hub scheme, will lead to overdevelopment.

Andrew Proctor, deputy leader of Broadland District Council, who oversaw the detailed bid, said: 'It's a very positive decision. It's not just the housing, it's all the other projects that come with it. We have stuck to our guns and said if we are going to permit major development in that area we have got to get the best out of it.'

Mr Proctor said a meeting with local councillors in the area was planned for Friday to discuss detailed ways in which the funds could be best used.

'Some of it will go towards the affordable housing scheme that Wherry Housing is developing, but a large chunk is going towards the retrofit project, otherwise you get a situation where people are looking at housebuilding without thinking of the community around it,' he said.

He added that the council was planning to continue engaging fully with people over the plans and he hoped that many people will now be won over to the project.

'We aren't here just to build houses, we're here to build communities, and we are looking towards the longer term,' Mr Proctor said. 'We've got a big programme of community engagement and we are making sure we talk to people before anything is done.'

David Hastings, former Broadland District Council chairman, and a member of Stop Norwich Urbanisation (SNUB), said: 'I'm amazed given that the government has got any money at all as the country is virtually bankrupt, they have got money to spend on a scheme that isn't wanted or liked by all of the parish councils. They are talking about building a town twice the size of Aylsham between Rackheath and Wroxham and they don't seem to realise the tremendous problems it's going to cause.'

Announcing his decision, Mr Healey said: 'Rackheath has done a huge amount of work to plan new homes designed and built to the toughest ever environmental standards. But green living isn't just about homes. That's why this cash will also help transform local schools and create new transport links and energy sources. By the time the eco-towns are finished green living will already be a way of life for these communities.'