THE council is to pump millions of pounds into a property fund in order to buy housing for homeless families.
The initial outlay will see £10 million invested in Real Lettings to secure 94 one and two bedroom properties in London.
If the policy proves successful the council could invest a further £10 million.
The majority of the money handed over to the fund will be borrowed from the government.
Today's announcement is on top of £20 million borrowed from the Public Works Loans Board (PWLB) in January last year, which saw the council directly purchase 80 homes.
It follows several years in which supplies of temporary accommodation have dried up and predictions that the number of families made homeless in Croydon would exceed 1,000 by 2014/15.
The council had intended to buy more properties itself but said it could not afford rising house prices or the costs of bringing the homes up to a lettable standard.
Instead it has become the first local authority to invest in the Real Lettings fund, which has been set up by landlords Resonance and homeless charity Broadway.
The council says the fund will produce a return via increased property values and rental income.
Real Lettings says it offers affordable accommodation in the private rented sector for "formerly homeless people, or those at risk of homelessness, who cannot access social housing but are ready and able to maintain a tenancy". It currently leases 170 flats across London.
The arrangement will see the council nominate tenancies and Broadway will then place households in the properties bought by the fund.
The council said it was "too early" to say where in London the homes would be. The houses bought last year were in the north of Croydon, Sutton and Lambeth.
Families will not be able to turn down an offer, but the council said it would consider location of jobs and schools when deciding who is moved where.
Dudley Mead, the council's cabinet member for housing, said: "With house prices going up beyond what is affordable to the council, we have to look at alternative and innovative ways of buying property to increase the supply of housing.
"This will ease the pressure on the council in managing homelessness and means we can place families in good quality accommodation as opposed to costly bed and breakfasts."
Broadway and Resonance praised the council for investing in the fund.
