A shortage of up to 17,000 workers in the construction industry is threatening £3bn of investment in North-East homes.

The money will be spent as local authorities rush to meet the Government's Decent Homes Standard for public sector housing by 2010.

But the investment, over a relatively short number of years, is likely to put huge strain on a workforce that is already stretched.

Dave Woodcock, chairman of the North-East branch of the Chartered Institute of Building, said: "Everybody in the industry would agree there is a serious skills shortage and we have an ageing workforce."

A recent study predicted there will be a shortage of about 17,000 skilled workers in the region's construction industry this decade.

Allan Kelley, director of resources at the Northern Housing Consortium, said: "The sector has been pushing for increased investment over the past two decades.

"Now we have it, we must ensure that delivery is guaranteed. The timescales facing us are tight and it is imperative that the necessary skills are available to meet the challenge ahead."

Under the Decent Homes programme, council housing stock is transferred, usually to arm's-length management organisations (Almos).

The Government has made hundreds of millions of pounds available to Almos to improve housing quality.

About £2bn will be spent in Tyne and Wear during the next six years, with another billion spread out over County Durham, Teesside and Northumberland.

Part of the deal is that public housing landlords find efficiency savings. But a shortage of workers will put those available on premium wages and could cause costs to soar.

The consortium is working with Your Homes Newcastle, the Almo that manages 32,000 former council properties in the city, on a pilot project to ensure that the skills problem is addressed.

They have set up the first Tyne and Wear Construction Skills Conference, held in Newcastle on Monday.

It will bring together more than 50 representatives from the construction industry, colleges, councils, the Learning and Skills Council, Almos and other social housing providers.

Mr Kelley said: "We need to start talking to contractors and colleges now to make sure they are geared up to supply the extra bodies we need.

"It is no good getting to 2008 and finding out we have got all this money and can only spend half of it."

If the project proves successful in bridging the skills gap, it will be extended across the North of England.