The housing minister published new allocations guidance for consultation that will release councils and housing associations from the current tick-box approach for allocating social homes.
At the same time, housing providers will be able to “tackle” tenants who are able to work but do not take up opportunities for jobs.
Ministers believed that for too long there was a sense of unfairness over who gets to live in social housing with a common belief that tenancies only go to those who know how to play the system.
Several councils have already indicated they want to introduce a flexible approach to manage allocations.
Westminster, Southend and Manchester councils will prioritise those who show responsibility and make an effort to find work; in Wandsworth those tenants on new flexible contracts who do not make an effort to find work will risk losing their tenancy.
Shapps said: “For years the system for social housing has been associated with injustice – where rewards are reaped for those who know how to play the system the best.
“Despite this terrible image a lazy consensus in social housing has ensured that, for an entire generation, no one has bothered to do anything about it.
“That’s why I have today published new guidance for councils that will release them from the one-size fits all approach and give them genuine freedom to ensure people benefit from living in a social home when they need it, for as long as they need it.”