Builders plan to withdraw from an arrangement to sell affordable homes directly to people who qualify for the scheme, following a row with local authorities.

Planning law obliges builders to make 20 per cent of each development available to local authorities for sale as affordable homes. But the scheme, in place since 2000, has been slow to take off because of differences between builders and local authorities.

Last November, the Irish Home Builders' Association (IHBA), the Department of Environment and county and city managers agreed developers would sell homes directly to buyers nominated by local authorities.

However, the association decided at its annual general meeting yesterday to stop co- operating with this plan because it says local authorities have been "blatantly disregarding" it.

IHBA chairman Jim Wood explained yesterday that local authorities have the option of either taking 20 per cent of the entire site, 20 per cent of the total floor space of a completed development, or 20 per cent of new homes in each development.

Mr Wood argued that the first two created problems for both sides, while the last option was the most efficient. He said that under the terms of last November's deal, the three parties agreed that the preferred method of implementing the law would be for developers to sell affordable homes directly.

Mr Wood added that the IHBA had asked Minister for the Environment, Dick Roche, to direct local authorities to implement this, but the department instead opted to issue them with guidelines, which are not binding.

He said local authorities were not implementing the deal fully, or were introducing their own conditions, such as seeking cash compensation in cases where 20 per cent of the homes in a new development came to less than 20 per cent of the overall housing scheme.

"Local authorities are ignoring the direct sale initiative or they're not implementing it fully. We want the Minister to direct them to comply with the agreement," he said.

Mr Wood said that IHBA members' decision to withdraw from the scheme did not remove the legal obligation to make 20 per cent of new developments available for affordable housing.

The Department of the Environment and Local Government said yesterday that the IHBA had not told it of its decision. It described the move as regrettable, in a statement.