Councils will be allowed to spend more money building houses after Theresa May announced a cap limiting their borrowing is to be scrapped.

The announcement came in the Conservative leader's conference speech in which she said more action was needed to ensure enough affordable homes were built.

She described the issue as "the biggest domestic policy challenge of our generation."

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The cap has long been a source of contention for councils and the news of its abolition has been generally welcomed.

Medway council leader Alan Jarrett said: “Anything that takes the hands of the government away from councils is a good thing so it will make a difference.

"But people should not run away with the idea that this will solve the housing crisis.

"It is not a silver bullet and one important issue is that the money we get from developers through Section 106 agreements [where developers pay to meet costs of schools and other infrastructure] does not come to us immediately but some way down the line.”

The Kent Council for the Protection of England (CPRE) said the move was “desperately needed” to help people get on the housing ladder.

Dr Hilary Newport, Kent CPRE director, said: “This is very good news and something we have been calling for for some time.

"We are not against housing development but we are against development in the wrong places and the wrong types of houses.”

The planning system was skewed in favour of developers building executive-style homes which could be sold for more money and councils often faced pressure to agree to fewer affordable homes, she added.

Mrs May said: “More new homes were added to our stock last year than in all but one of the last 30 years. But we need to do better still.

"The last time Britain was building enough homes – half a century ago – local councils made a big contribution.

"Solving the housing crisis is the biggest domestic policy challenge of our generation" - Theresa May

“We’ve opened up the £9 billion Affordable Housing Programme to councils, to get them building again.

"And at last year’s conference I announced an additional £2bn for affordable housing. But something is still holding many of them back.

“There is a government cap on how much they can borrow against their Housing Revenue Account assets to fund new developments.

"Solving the housing crisis is the biggest domestic policy challenge of our generation. It doesn’t make sense to stop councils from playing their part in solving it.

"So today I can announce that we are scrapping that cap.”

Average prices in the United Kingdom stood at just under £244,000 in January 2018 but in Kent the average of £316,000.

Mrs May’s speech was well received by the party faithful and she delighted the audience when she came on to the stage dancing to the Abba song “Dancing Queen” - a reference to her recent trip to Africa when her attempt to dance was widely ridiculed.