The Homes and Communities Agency is seeking expressions of interest from potential developers for a share of the pot of cash which the government hopes will enable an extra 10,000 properties to be completed.
Developers need to apply formally to the agency and draw up a proposal. There is a separate £100 million pot for local authorities seeking to build social housing.
'They will have to come up with proposals for how the funding can be used to unblock a site which is currently stalled. We want them to put forward proposals that encompass the full resource of the agency,' said HCA chief executive Sir Bob Kerslake.
Proposals could include grant funding, gap funding, equity sharing or paying for up-front infrastructure.
'We'll then review these options and see if they achieve value for money and if they're ready to go,' added Kerslake.
He said the shortlisting of sites which could benefit would be complete before the summer, with an aim to get formal contracts signed before the end of the year.
Housing minister Margaret Beckett said she was looking to use the money for early, positive action.
Meanwhile Persimmon, the UK's largest homebuilder by market value, said the worst is yet to come for developers as signs of improving demand are not translating into a recovery in house prices.
Potential customers are struggling to get credit as banks tell their valuation teams to be cautious, said Finance Director Michael Killoran.
He also pointed out that developers are having to offer incentives such as paying utility bills for a year, in order to attract buyers and that eats into their margins even further.
