All development will have to be carbon neutral in the future as part of the government's evolving policy on climate change, housing and planning minister Yvette Cooper has signalled.

Taking a first step in this direction, the government has announced a feasibility study into how to ensure that development in the Thames Gateway is as low carbon as possible.

"We want to assess how far and how fast we can move to ensure cost effective changes to support 120,000 new homes and 180,000 new jobs as well as supporting existing jobs and communities too," Cooper explained in a keynote speech to the environmental lobby group the Green Alliance.

Cooper has also announced a second phase of the government's successful Design for Manufacture initiative which has already been successful in kick-starting the provision of innovative low cost and low carbon housing for a basic cost of around £60,000. The new phase will be run by English Partnerships on six new sites and will create small-scale eco-community developments, rather than individual homes.

Cooper has made it clear that this latest phase in the competition will challenge developers and builders to deliver either low carbon or carbon neutral affordable homes. Full details of the new competition will be announced this later this summer. The planning mister used her speech to spell out some of the themes of a promised new planning policy statement on climate change which will "help set a long term vision for the way we build and develop".

Cooper insisted: "We should be setting a long term ambition to move towards carbon neutral development." She added: "That doesn't mean setting unrealistic standards in the short term, or setting impossible expectations for our existing homes our jobs, our transport and our lifestyles.

"Nor does it necessarily mean carbon neutrality for every new home, or new workplace. But it does mean raising our game across the whole of our new developments to see what gains we can make".

She stressed that the new PPS would focus on ensuring sustainable development not less development. "But it needs to make clear that the location of new development should support the reduction of carbon emissions, through for example ensuring mixed development and reducing the need to travel," she said.

The new guidance would also have to show how the planning process can be used to deliver renewable, and more sustainable forms of energy, encouraging more fuel-efficient technologies such as combined heat and power as well as microgeneration.

"Our challenge is to use the review of Building Regulations, the Code for Sustainable Homes and the planning policy statement on climate change, to support a long term ambitious framework for moving first to low carbon and then towards carbon neutral development," she said.

In a related development, the Green Alliance has urged the Department for Communities and Local Government (DCLG) to require all new buildings to incorporate on-site renewable energy supplies by 2015.

A report from the environmental lobby group has also called for a more ambitious Code for Sustainable Homes, as well a version for existing houses, linked to social housing standards and incentive schemes to ensure improvements are made.

Meanwhile, the planning minister and London mayor Ken Livingstone have launched a regeneration strategy for the Lower Lea Valley, which will be a focus for the 2012 London Olympic Games in east London. This new blueprint is designed to deliver a "lasting legacy" of up to 40,000 new homes and 50,000 new jobs harnessing the valley's natural environment of canals and waterways and green spaces to create a "water city" which is planned to set new standards in energy conservation and green building practice. The strategy for the valley is set out in a draft planning policy framework issued by the Mayor of London and prepared in conjunction with the London Thames Gateway Development Corporation and the London Development Agency.