HOUSING officials need £135m from the government before 20,000 council homes can be transferred to a new landlord.

Without it, the entire transfer, which will lead to millions of pound of improvements to council houses, could fail.

Liverpool council will start talks with ministers tomorrow in the hope of getting hold of the money within the next few weeks.

Council officials today said they were confident they would get the money and hand over all their properties to new housing association Liverpool Mutual Homes (LMH).

But some councillors fear ministers will be put off by a series of problems blighting LMH.

Wavertree Labour MP Jane Kennedy has asked the government to investigate the recent walk-out of three senior managers.

The council will pay the £135m to LMH as a "dowry" so it can start paying for improvements suchas new kitchens, windows and central heating. LMH will then borrow the rest of the money it needs to bring homes up to 21st century standards.

Without the dowry, LMH might struggle to obtain the other money because the standard of Liverpool's council housing is so poor and low-value.

Housing officer Rob Farnos said: "The government has a pot of money for councils in our position, so we can give a dowry to the new landlord.

"We need that money to make the transfer happen. If it does not stack up financially, there is no point proceeding. These are crucial talks.

"The government obviously wants it to work, but wants to make sure it is happy with all the arrangements.

"We have asked for the amount that we think we need."

But Cllr Steve Munby, Labour opposition spokesman on regeneration, said the government "will need convincing" that the handover is going smoothly.

"LMH is still at an early stage, but clearly things are going wrong if senior staff are packing their bags.

"The government is prepared to put huge amounts of money into Liverpool's housing, but will want to hear astrong case before agreeing to this much."

Liberal Cllr Steve Radford added: "This money is desperately needed so a deal can be offered to tenants that they feel secure about."

Council tenants will vote in September whether they want the handover to happen.