A solution could be in sight to a long-running saga over a stalled home development in a Norfolk town thanks to a new government fund.

Building work could soon restart at the C-Zero Long Meadow site between Diss and Roydon after the 114-home development was listed among 224 building projects chosen to receive cash from a �570m pot available to the Get Britain Building scheme from the Homes and Communities Agency.

So far, only 29 homes have been finished after mortgage lenders refused to finance the sales of the properties, which are subject to a discounted market sale agreement by which they are sold at a discount price to the usual market value so local homebuyers can afford to buy them.

However, the lenders, including Nationwide, the Royal Bank of Scotland and Santander, feared the agreement, imposed by South Norfolk Council when planning permission was granted, meant they would not be able to recoup the money invested.

C-Zero director Robert Pearson said: 'This should mean that we will be able to start building again. We are reasonably confident now that we have been shortlisted, but there are still a number of hoops to go through before we reach that stage.'

A revised planning application will be submitted for a reduced number of homes and the discounted market sale agreement will be scrapped in favour of other forms of affordable home ownership recognised by mortgage lenders.

The Birmingham-based developer also needs to complete a due diligence process to secure the Get Britain Building funding, which will involve completing a questionnaire stating why the development stalled.

If these hurdles are cleared, a further phase of 61 homes will be built on the site.

The discounted market sale scheme is part funded by a �3m grant from the Department of Energy and Climate Change's Low Carbon Investment Fund with a one-bedroom flat being marketed at �72,500 and a three-bedroom house at �109,000.