Councils were today given more flexibility in how they allocate social housing, enabling them to prioritise families with local connections.
Housing Minister John Healey has published new statutory guidance making it clear that people in greatest need of housing must be given priority.
But he has also given councils more freedom to allocate council houses according to the needs of their local area.
This extra flexibility enables them to prioritise families with local connections and people looking for jobs locally, while it will also help local authorities to tackle problems such as overcrowding or under-occupation.
But Mr Healey called on councils to do more to tackle the myths about housing waiting lists, so that local people have confidence that the system is fair.
Councils will now be expected to consult their local communities on changes to their housing allocation policies, as well as keep people informed about who is being given social housing, to ensure their policies are better understood.
Mr Healey said: "People must be given confidence that council homes in their area are allocated fairly.
"Councils must make sure people can see more clearly how homes are being allocated in their area.
"I'm giving councils greater leeway to do this. While priority will still be given to those in greatest housing need, they will now also be able to allocate according to needs specific to their local area."
Today's announcement comes days after the Government launched a crackdown on housing cheats who sub-let their council homes to people who do not qualify for social housing.
Caroline Davey, Shelter's deputy director of policy and campaigns, said: "Britain's desperate shortage of social housing makes allocating it incredibly difficult.
"However, Shelter believes that local authorities should continue to prioritise people with multiple and complex housing needs so that the most vulnerable people in society can still access a decent home.
"We hope local authorities will take this into account when deciding how to apply the new guidance."