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David Orr, chief executive of the National Housing Federation, said the prime minister's announcement was "extremely welcome".
"This represents a total step change. For years, the way that money was allocated meant housing associations couldn't be sure of long-term funding to build much-needed affordable housing," he said.
He said that by changing the way the funding was allocated, ministers had given "long-term confidence and confirmed that we are trusted partners in solving the housing crisis, building new homes and communities".
But shadow housing secretary John Healey said the reality was spending on new affordable homes had been "slashed" and the number of new social rented homes built last year "fell to the lowest level since records began".
"If Conservative ministers are serious about fixing the housing crisis they should back Labour's plans to build a million genuinely affordable homes, including the biggest council house-building programme for more than 30 years," he said.
The English housing survey for 2016/17 reported that 3.9 million households - about nine million people - lived in the social rented sector, which was 17% of households in the country.
The funding covers the next spending review period, from 2021 through to 2028.
Downing Street said the money was separate to the £9bn of public funding put toward the existing affordable homes programme until 2022.