They are already calling it the house of the future, a pace-setter in design which will see buildings erected in half the time that it takes to construct a traditional home.

But the modular house is no virtual reality dream. Soon it will be transported from its York assembly line - complete with carpets, tiling, electrics, plumbing and the kitchen sink - to Murray Grove, Hackney, east London.

There, on the edge of the City, 30 pre-decorated flats will be hoisted into place by a crane this spring to create an instant five-storey block. Balconies and a lift will be installed, a steel roof bolted on, and by July the first tenants will be moving in.

Although the £2.2 million Murray Grove prototype is about 10 per cent more than a traditional block of flats, developers believe costs will come down substantially once more orders come in.

Dikon Robinson, development director of the Peabody Trust, the housing association behind the project, believes the new inner city house of the 21st century could come in the form of a ready-made block, built mainly with high insulation steel - the ultimate in home delivery. "I wouldn't be surprised if you'd be able to go into a showroom and order one just like a car," he said.

A few miles away, at Woolwich, work will soon start on a larger project using quick setting concrete - and a minimum number of building workers - to create 160 high insulation homes for renting and buying.

Electrical systems, and other services, will be inserted into the concrete walls and floors, which dry overnight, followed by the installation of a pre-cast roof. And, within months, a new estate will be born.

Yesterday on a visit to the Netherlands, the Deputy Prime Minister, John Prescott, and the architect Lord Rogers - who chairs the Government's urban task force - hailed these new building techniques as one key to the renaissance of decaying urban Britain.

Two days after warning that inner cities needed rescuing, Lord Rogers predicted that others would follow the example of Hackney and Woolwich. "They are potentially very significant," he said.

While touring new housing developments in The Hague, Mr Prescott said: "We need to be radical. I'd like to think entry into the new millennium will mean an entirely different approach to how we plan our communities... to enjoy the richness of cities we have to redesign."

Holland is seen as such a leader in new building technology that its largest housing association has joined forces with the Peabody Trust - London's largest association - to develop the Woolwich site.

The partners say that the new system will incorporate Dutch technology of design, ultra-quick construction and energy efficiency in which building times can be dramatically cut.

Driven by economic necessity, Peabody believes it is setting standards others will be forced to follow.

"We have difficulty getting contractors to complete on schedule and construction times in London are often extended by as much as 50 per cent," said Mr Robinson, an adviser to Lord Rogers's task force. "On top of that there's a tremendous skill shortage - it is hard to get bricklayers and other tradesmen."

Peabody says the five-storey building will be a bold and attractive design reflecting contemporary architecture, with a clay tile facade fixed to an aluminium support structure. Focal point of the block of flats will be a glass lift in the corner.

Peabody says a substantial percentage of the extra cost will be recovered from early rents - by getting the project completed much faster than usual. If successful, Peabody plans to move into large scale modular production.

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