The Homes & Communities Agency has granted £232,000 towards a new affordable housing scheme in South Lakeland.
The Hawkshead First School scheme will provide five new homes for rent on Main Street in the centre of the village including the old school building which will be converted into a two bedroom house.
A further £34,000 has been put forward by South Lakeland District Council meaning work can now begin at the site.
The new homes will be delivered by Two Castles Housing Association and are anticipated to be completed by summer 2011. All of the homes will be available for rent to people with a local connection and will be built to Code for Sustainable Homes level 3.