PFI, which is aimed at outsourcing construction projects to private contractors. Most of the pounds 500m wil be invested in schools and transport.
The Government has also introduced measures to streamline the PFI process which should speed up the award of contracts. The move comes in to response to growing criticism from the private sector of the PFI which has been dogged by heavy delays and bound up in bureaucratic red tape.
Hilary Armstrong, Local Government Ministe, said: "Authorities and the private sector can now use the opportunities PFI provides to remedy investment backlogs in schools, transport systems, police, fire, waste and other services."
Adrian Montague, head of the Treasury PFI Taskforce, said: "We have a lot of new projects in the pipeline. There is a huge amount of interest in the PFI."