A £5bn ($6.47bn, €5.76bn) government package of support for housebuilding was tentatively welcomed by the housing and construction industries, but ministers were warned a lack of supporting infrastructure and a skills shortage are barriers to solving the ongoing housing crisis.

An extra £2bn of funding will be made available to bring public land with planning permission up to scratch so much-needed housebuilding can take place, Conservative ministers announced at their party conference in Birmingham.

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The additional billions will come from new public sector borrowing and will fund the Accelerated Construction Scheme to carry out work to make publicly-owned brownfield land viable for housebuilders.

A further £3bn of previously announced funding would be directed into a Home Builders Fund. Of this, £1bn will be short-term finance made available to smaller builders for 25,500 new homes by 2020.

And £2bn from the government's infrastructure spending will be used over a longer period of time to deliver 200,000 more homes. Moreover, new changes to planning laws will make it easier to secure planning permission for new housing on brownfield sites.

"The industry has increased housing supply significantly in recent years but innovative thinking is required if we are to deliver the number of homes the country needs," said Steve Turner, a spokesman for the Home Builders Federation.

"Moves to speed up how quickly builders can get on to sites, to bring more land forward more quickly and to incentivise new entrants will undoubtedly help increase output further."

Mark Hayward, managing director at the National Association of Estate Agents (NAEA), said his organisation is "highly supportive" of the housebuilding plans.

"However, we have some concerns when it comes to delivery, and wonder whether the plans will actually be feasible," he said. "It's all very well releasing land and providing the finance to build new homes, but if the infrastructure and labour isn't there to turn bricks and mortar into homes, it simply won't be doable. We now need the detail and clearer plans on how this will work in practice."

Rico Wojtulewicz, policy adviser to the House Builders Association, said the announcement "is a rehash of government policy that was being debated over a year ago".

"Accelerated construction, easier planning, registers of brownfield sites all sound eerily familiar," he said. "The only thing that has changed is that the finance for smaller builders comes with strings attached as they must use innovative methods of construction.

"If this government were truly committed to making more homes more affordable, it would not have enshrined £450,000 in the Housing and Planning Act as the definition of affordable housing."

"Relying on large housebuilders to deliver the homes we need is doomed to failure," said Christian Faes, co-founder and CEO of online mortgage lender LendInvest. "It is absolutely right that this fund should be targeted at small builders. For too long, accessing funding for their projects has been simply too difficult, with the big banks not interested or too constrained to help.

"However, helping them to pick up the housebuilding slack will take more than money alone – the government must act immediately to make land more accessible to them, as well as supporting measures which will ensure they develop the skill set they need to make a success of their projects."

Housebuilding is running well below the 250,000 new units needed a year to meet demand, according to various estimates. There were 142,390 new housing completions in England and Wales in 2015, a 20% annual rise. The shortage has driven up rents and house prices in recent years. The government is targeting a million new homes by 2020.

"The private sector clearly has an important role to play but it cannot build the homes we need on its own and government measures announced today to create a resurgence of SME builders are an important step towards increasing the private sector's output," said Lord Porter, chairman of the Local Government Association, which represents councils.

"Councils also support moves to bring forward wider packages of public land that can boost development but must remain able to manage their assets locally as they are best-placed to secure the best deal for local taxpayers.

"It is important for government to recognise that planning is not a barrier to housebuilding. Councils are approving nine in 10 planning applications yet our recent analysis also shows there are hundreds of thousands of homes with planning permission which are still waiting to be built."

Philip Hammond