New "expandable" family homes which can be built in less than a week and cost just £60,000 are planned for a Sussex town.

Construction firm William Verry's flat-pack house plan is one of six winning designs in a Government competition to come up with quality, low-cost homes.

The company been chosen to build five of the £60,000 homes and seven more innovative houses and flats on a Government-owned plot in School Road, Hastings.

The homes comprise factory-made wooden and concrete panels which can be put together and made water-tight in just one day, which is a major factor in reducing costs.

One novelty is that the distinctive-looking German-designed homes can be adapted and extended according to the size of families living in them.

A third bedroom can be installed by putting an extra ceiling in the dining room. A shower room and even lifts can be added.

The homes will also be green and energy efficient, with an "environmental buffer" in the roof space which minimises heat loss.

A William Verry spokesman said: "This project heralds a major milestone in the use of advanced construction techniques in this country.

"All homes have access to outdoor space, balconies or roof terraces and exploit surrounding views over the Ore valley."

The scheme is going through the planning process and the developer hopes to get on site later this year.

Deputy Prime Minister John Prescott, who launched the competition for £60,000 houses, said: "When I first challenged the construction industry to build a quality two bedroom home for £60,000, there were many people who claimed it just could not be done.

"I now look forward to seeing these cutting-edge homes taking shape soon across the country as well as visiting some as they open their doors to new residents."

Although construction costs are £60,000, experts warn the market price could be considerably higher.

Shane Cuddington, of Rush, Witt and Wilson estate agents, said: "They are very difficult to value because we have never seen anything like them before.

"Currently the cheapest two-bedroom starter homes in the town are in Pinders Road and we have just sold one for £96,000.

"But the Pinders houses are traditional brick homes with their own gardens, and these are not.

"I think if they went on the market for anything under £100,000 they would fly out of the door because there is hardly anything that cheap in the town."

Jeremy Leaf, of the Royal Institute of Chartered Surveyors, said: "It's unrealistic to think these homes will sell for such a low price in all parts of the country."

The site overlooks Ore Valley, where English Partnerships, which organised the competition, is planning massive regeneration.

The programme will turn disused industrial wasteland into a huge new community with 700 homes, an overhauled road and rail system, new shops and community facilities.

Preparatory works are under way now, with completion of the entire Ore Valley project expected about 2012.