Oxford City Council is selling off a £1m Georgian townhouse in Jericho, despite a long list of families waiting to be re-housed.

However, the council has insisted the money can be spent on refurbishing homes across the city.

The six-bedroom house, in Walton Street, is set to be the most expensive residential property ever sold by the council.

And set in the heart of one of Oxford's most desirable neighbourhoods, the three-storey terraced home should generate plenty of interest.

Until recently the building has been rented to a special needs housing provider, but that organisation has not extended the lease and city councillors have decided to sell it.

Housing bosses hope to net around £1m from the sale - money that will be reinvested in the council's housing stock.

Other options, rejected by the council's executive board, included re-letting the property to one of the city's 250-plus families waiting for a home with four or more bedrooms.

But Mark Humphrey, 42, who has been waiting five years for a larger council house, said he agreed with the decision.

His family, including four children, currently live in a two-bedroom home in Iffley.

He said: "I am not against them selling it off as long as the money is used to improve other houses."

Patrick Murray, the council's cabinet member for housing, said the sale was an exception to the council's policy.

He said larger homes in need of repair were usually retained, and one three-bed home had been recently extended.

But he added: "I felt this was an exceptional circumstance because it was valued at £1m.

"It could fund as many as 100 houses being brought up to the decent homes standard."

The city's 8,000 council homes must be brought up to the Government's 'decent homes standard' by the end of 2010 - which covers everything from heating systems and windows to kitchens and bathrooms.

The entire programme of work, from 2003 to 2010, is set to cost the council £75m.

Much of the work has already been completed and the budget over the next three years is £21m.

Graham Bourton, head of Oxford City Homes, said the council still needed to find £9.3m to fund the remainder of the work.

He said: "£1m would probably pay for 125 new kitchens."