More than 200 schools in central China have been forced to close in the past few years due to lack of staff.
Education minister Zhu Kaixuan told an education conference in Beijing earlier this year that "due to historical reasons and an imbalance in economic development in different regions, there are a large number of teachers who have no apartment or who find it difficult to house themselves".
Few teachers get more than 400 yuan a month, less than an average factory worker's wage of around 550 yuan. Teachers' pay ranks third from bottom of the league of publicly-paid employees. Unpaid salaries amounted to 290 million yuan (Pounds 34 million) last year as a number of provinces ran short of cash and found they could not pay teachers for six or seven months. The wage delay made it impossible for many teachers to seek accommodation in the private sector.
Official figures show that at least 790,000 urban teachers and their families were facing severe accommodation problems - 420,000 could not get state housing, the others were forced to live in cramped conditions with less than 43 square feet per person to live in. The government has set a 97 square foot living space standard for urban residents.
To meet this target the government will need to invest more than 80 billion yuan (Pounds 6.2 billion) in building flats for teachers, 75 per cent of it in towns and cities. In Beijing alone in the past five years the authorities built more than 1.18 million homes for teachers at a cost of 48 billion yuan (Pounds 3.5 billion). And 280,000 units were built last year in the capital, often replacing cramped "slum-like" older buildings.
In Beijing and Shanghai where business opportunities are highest, teachers have been leaving in droves and the number of new recruits is falling.
However, it is unclear where the money will come from for new housing. State spending on education fell to 2.4 per cent of gross national product in 1995 compared to 2.68 per cent in 1994 despite the government's policy of increasing spending to 4 per cent of GNP by the year 2000.
Mr Zhu said China would experiment with new ways to finance the scheme and indicated that part of the investment would have to come from teachers' wages.
Late last year officials appealed for "donations" from residents to award prizes to teachers to prevent hard-up teachers fleeing rural areas where many live in squalid conditions. The main target is central and western China where literacy rates are low and there are relatively few teachers.