A committee of MPs has given a guarded welcome to the idea of a new levy on developers to help pay for local infrastructure.
The Commons communities and local government committee said the planning gain supplement was "one way of achieving" the funding boost needed if the government is to increase house building rates from 150,000 to 200,000 a year.
But it warned there are "significant risks" if the charge is not simple and precisely introduced.
The supplement, which the government first proposed in December last year, is a tax on 'land value uplift' - the increase in the value of a piece of land once full planning permission has been granted.
The charge would run in tandem with a scaled-back version of the current system of section 106 agreements, under which developers agree to provide infrastructure or affordable housing.
Committee chairman Phyllis Starkey said: "The committee and the government agree that additional resources for investment in infrastructure need to be found if the government is to realise its ambitions to increase the supply of housing.
"The committee's analysis shows that a planning gain supplement represents one way of achieving this.
"The committee has examined the issues that PGS raises and proposed a series of refinements which we expect the government to consider, but we also found that more work needs to be done, by the government, on examining the strengths and weaknesses of the existing section 106 regime."
The report said the government should look at two possibilities - one of a dual system based on the supplement and section 106 agreements, and the second a reformed section 106 system only.
And it said there would be "advantages" in central government, rather than local authorities, collecting the supplement.
But it said: "This needs to be coupled with statutory obligations that the overwhelming majority of PGS revenue is recycled to local authorities and that the majority of PGS revenue should be returned to the local area affected by the development."
Under the existing Section 106 system, local authorities reach deals with developers and collect money from them.
The MPs concluded: "In making its determination of the PGS rate, the government will need to strike a balance between setting the rate too high, which could discourage development and encourage avoidance, and setting it a rate which will cover the additional costs of administering the tax, generate a surplus over current arrangements and provide a contribution to investment in strategic infrastructure."
Commenting on the report, Liberal Democrat housing spokesman Dan Rogerson said infrastructure would be better provided through his party's policy of local income tax and business rates.
He said: "This report confirms that the Treasury's proposals on planning gain supplement contradict everything Ruth Kelly has been saying about devolving power to local people and communities.
"Replacing the current planning contribution paid by developers with planning gain supplement won’t provide more money to pay for the roads, schools and GPs surgeries that any new homes need.
"It will just strip local councils of more of their already limited powers and finances and hand it over to Gordon Brown.
"The government’s professed commitment to localism is shown to be utterly shallow."
