A company that uses recycled newspaper to insulate properties is hoping to capitalise on changes in building regulations by manufacturing environmentally-friendly timber-framed houses.

Murus plans to use new rules demanding higher insulation levels - as well as the Government's recently announced drive to pour billions of pounds into new, affordable and sustainable housing stock - to its advantage.

The company was set up by David Bateman, former chairman of Timber Frame Solutions, in Blyth, Northumberland, and was launched at the North East of England Business and Innovation Centre, (BIC) in Sunderland.

Murus took advantage of the Bic's virtual office service to provide start-up companies with an address, telephone answering, postal and secretarial service, releiving them of the expense of renting office space.

But within months, the company needed 800sq ft offices at the BIC.

Mr Bateman designed a timber-framed, single skinbuilding system, which can be used to construct buildings six storeys high.

All Murus composite panels are manufactured from sustainable materials and the walls are insulated with a cellulose material made from recycled newspapers.

This means buildings require no central heating, resulting in savings on energy costs. Products used also have a complete environmental audit trail.

Mr Bateman said: "Demand for timber-framed housing is now soaring, with manufacturing capacity in the UK only coping with about four per cent of demand.

"The Government's new building regulations means it is more difficult to comply with these changes using traditional brick and block methods of construction."

The firm's first project was providing a system for a two-storey building for the Institute for Middle Eastern and Islamic Studies, at Durham University.

Another project includes a 12-bed care home in County Monaghan, Ireland, for a charitable trust keen to cut its £100-a-week heating bills.

Mr Bateman also plans to set up two factories close to areas where many of the 500,000 homes planned by the Government will be built.