Health secretary Alan Milburn has outlined plans to improve around 600 GP surgeries with £55 million of funds generated through the private finance initiative.

Making the announcement during a visit to Newcastle upon Tyne, Milburn said the new plans would see hundreds of GPs' surgeries and health centres in poorer areas of England rebuilt, and many more refurbished.

With many primary care premises over 30 years old, cramped and below recommended sizes, the government says that new investment is required to enable GPs to offer their patients modern services.

"This extra cash for primary care will help to tackle decades of neglect," promised Milburn.

The plan will see a mixture of public and private money, £55 million in total, being spent on providing new premises to train and employ more new GPs, with grants targeted at areas where there are fewer GPs practising.

The funding consists of £30 million of public capital to enable more premises to train new doctors, a further £15 million of public funding to help accommodate expanding numbers of primary care workers and £10 million to develop six NHS Local Improvement Finance Trust projects to build and own new facilities and lease them to GPs, pharmacists or dentists.

The LIFT schemes are a public-private partnership that will build or refurbish the surgeries and then lease them back to the GPs. The LIFT funds will come from a company called Partnerships for Health, which is owned half by the Department of Health and half by Partnerships UK, the company formed from the privatisation of the government's Treasury PFI taskforce.

The government hopes that by offering GPs flexible lease arrangements together with other pay incentives to work in inner city areas, more GPs will be attracted into the poorer areas.

Milburn gave his strong backing to extending the use of the PFI arrangements, despite criticism of the policy from health unions. The unions are running a campaign against using private sector funds in the NHS, arguing that its takes money out of the public purse and gives it to private companies and also fail to provide any real additional funding.

"PFI is delivering the biggest hospital building programme in the history of the NHS. Now I want to take partnership between the public and private sectors further. I am determined to extend its benefits into primary care in the poorest parts of England," said Milburn.

"Partnership between the NHS and the private sector will help tackle health inequalities," the minister added. In total the government has earmarked £195 million for the PFI partnerships.