The North-East stands to benefit from a £500m cash boost unveiled by the Government today as part of a bid to regenerate rundown property blackspots.

The announcement has been welcomed by business and community leaders as an opportunity to tackle social and economic problems, while building better communities for people in the region.

Baroness Blackstone launched the regional Communities Plan at an event in Newcastle yesterday, which included a live link-up to the House of Commons for a statement by deputy prime minister.

John Prescott was announcing a £22 billion plan to drive forward thriving and sustainable communities across the country.

Baroness Blackstone said the Communities Plan would include the establishment of the North-East Housing Board, with responsibility for deciding how the available resources for housing capital investment could best be used to meet the needs of the region.

The Newcastle/Gateshead Pathfinder project will get a share of £500m which has been allocated over the next three years for investment in the Housing Market Renewal Pathfinders.

Baroness Blackstone said: "A key issue is the need to restructure the housing market in the North-East to meet the needs and aspirations of the population - the region currently has too much old and social rented housing.

She added: "Despite problems of market failure, the region also needs to address issues of affordability of housing in some areas, particularly in the commuter belts surrounding the Tyneside and Teesside conurbations and in some rural areas.

"We need to improve the condition of the region's housing stock. Almost 55 per cent of the local authority housing stock in the North-East falls below the decent homes standard."

Baroness Blackstone highlighted the need to tackle deprivation, pointing out that 36 per cent of the region's population lived in wards ranked in the top 10 per cent most deprived in England.

Yesterday's news was welcomed by North East Assembly chairman Tony Flynn, who added a cautionary note: "We hope that resources are not going to be sucked into the South-East. We need significant new investment in the longer term for this region." .