Local government secretary Stephen Byers intends to introduce the system which will allow tenants to build up a share in their council home as they pay rent.
The announcement means even those councils not transferring their stock to an association or arm's-length company will lose control of their housing as tenants take up the right-to-buy scheme.
A spokeswoman for Shelter said: 'Local authorities are still responsible for housing people. They still have a legal duty to allocate housing, even though they are passing on control of their stock.'
a strategy for regeneration and consider other issues such as property repairs.
Mr Byers said: 'Helping a tenant gain a direct stake in their home has the potential to radically change the outlook of the occupiers of social housing.
'Equity shares also have the potential to provide tenants with the assets they need to open up new opportunities. Helping tenants to acquire equity shares could help them obtain access to the financial services most of society takes for granted.'
As councils do not have the funds to carry out improvements to housing stock, Mr Byers said councils should consider stock transfer and private finance initiatives.
'Local authorities need to take a businesslike approach to managing their assets. All councils should assess the state of their own housing and construct plans to improve conditions,' said Mr Byers.