Two thousand key workers including nurses, teachers, and police officers working in housing hotspots outside London will receive £10,000 equity loans towards their first home.

The £20m Starter Home Initiative equity loan scheme will help 1,000 nurses and health care workers, 700 teachers, 220 police and 80 other key workers to buy homes in areas where high house prices are undermining recruitment and retention.

Announcing the publication of bidding guidance for the scheme Housing Minister Lord Falconer said: "Unlocking the housing market for dedicated and essential staff like nurses and teachers will help ensure they are not priced out of their chosen professions. This kind of initiative is vital to secure the future of our public services and attract excellent staff.

"High house prices in some parts of the country have added to recruitment and retention difficulties. Tackling this issue is essential in ensuring public sector workers have the keys to the communities they serve."

Bids are invited from registered social landlords, local authorities or employers to administer the scheme providing £10,000 equity loans to help the key workers. Targeted areas are set out in the bidding guidance and allocations to successful bidders will be announced in May.

Minister for School Standards Stephen Timms said: "Today's announcement is good news for teachers and schools that want to attract and retain teachers. Over 2,800 teachers have already benefited from the Starter Homes Initiative and this funding will enable an extra 700 teachers to buy homes in high cost areas. The cost of housing in certain places can inhibit schools when recruiting. This initiative gives teachers more choice as to where they are able to live and work and builds on our work enabling schools to recruit and retain first class teachers."

The allocation of £230 million of the Starter Home Initiative budget, announced in September 2001, is already helping key workers to buy homes. Funding for the £20 million equity loan scheme will complete the allocation of the Starter Home Initiative budget of £250 million, which will help a total of 10,000 key workers.