They include persuading municipalities to locate low-cost housing settlements on high-value peri-urban land, slashing environmental impact assessment (EIA) requirements for township developments, and encouraging subdivision of large land holdings.

The need for reform is based on an intriguing premise: that SA's most pressing problems - job creation, poverty reduction, crime and HIV/Aids - will never be tackled effectively until the effects of spatial apartheid are undone.

The report points out that SA is unique in having lower-density settlements around urban centres and higher densities in peri-urban areas. This is because apartheid policies - and an elaborate framework of laws, zoning regulations, plot subdivision restrictions and tax incentives - ensured blacks lived in rural homelands or satellite townships.

Collection Mudzanani knows how these restrictions operate. He wants to start a horticultural service supplying plants to Gauteng companies. The 29-year-old left the employ of an indoor plant company two years ago, believing he had secured land for his business. But fierce opposition from wealthy neighbours and environmental authorities, invoking a host of land-use regulations, has prevented him from realising his dream.

Mudzanani's is one of about 300 squatter families in the Muldersdrift area on the West Rand who formed a housing association in 1996. Most had lived on surrounding farms and been made homeless by a spate of evictions sparked by the 1994 elections.

The Muldersdrift Home Trust Foundation started a savings scheme to buy land for a mixed-use settlement comprising low-density housing and small-scale agricultural enterprises. Members wanted their village to be close to their children's schools and the farms, lodges and entertainment facilities - including celebrity wedding venue Avianto and Carnivores restaurant - where many worked. It would be called Ethembalethu (Our Hope).

A decade later, after two cancelled sale agreements and being paid almost R250 000 in a court settlement with local landowners for not buying in their neighbourhood, the squatters were allocated a 30 ha farm portion 4 km away, paid for by the provincial housing and land affairs departments.

But their hopes of building their village there are likely to be dashed by environmental objections raised by other branches of the Gauteng government. These include the provincial authority managing the Cradle of Humankind, which plans to create a buffer zone around the world heritage site where only low-density development linked to tourism will be allowed. The village would lie within this zone, and set a dangerous precedent for urban sprawl.

"There will be no sub divisions and no township developments, whether lifestyle estates or low-cost housing," explains Cradle manager Michael Worsnip. "We can't have the area looking like a suburb of Jo'burg and expect to attract tourists."

Worsnip says his agency identified seven suitable sites for the community closer to jobs, services "and economic benefits of the Cradle". But all fall within a large block of land they'd agreed not to live in as part of their court settlement with Muldersdrift landowners.

Muldersdrift landowner representatives cite, as grounds for opposition, fears of a squatter camp mushrooming on their doorstep and the destruction of the Cradle's tourism potential.

This extraordinary tale was used as a World Bank case study on the difficulties the poor face in finding a convenient place to live in post-apartheid SA.

Land affairs director-general Glen Thomas says he backs the World Bank recommendations and will head a task force to look into how they can be implemented. He expects to finalise plans with heads of the housing, agriculture and local government departments by the end of this year.

This puts him on a collision course with environmental authorities and landowners who fear property values will plummet and crime rates soar if low-cost housing developments sprout in wealthy neighbourhoods.

Thomas says these objections are short-sighted. "Yes, this will bring down prices for upper-income landowners but it will make more housing and land available for lower-income earners." Taking a short-term financial knock is outweighed by long-term socioeconomic benefits. "This will lead to more orderly settlement patterns," he says.

Similar arguments will be used to persuade municipalities to make high-value land available for low-cost housing, he says.

Stephen Berrisford, one of the authors of the report, says most municipalities face huge service payment arrears so opt for the short-term gain of selling expensive land to developers willing to pay for bulk services and promising to broaden their rates base. This turns into a long-term liability when low-cost housing is built on cheap, remote land, making service provision more expensive and harder for residents to pay for.

Apartheid spatial patterns are reinforced because housing sites are not connected to emerging patterns of investment and growth, so their assets won't appreciate. "This disconnection will burden municipalities with operation and maintenance subsidies for decades to come," the report says.

Much of this is in line with government thinking. The Accelerated & Shared Growth Initiative for SA (AsgiSA) lists spatial apartheid as a key impediment to growth. Reversing it is the primary objective of the presidency's strategy document, the "National Spatial Development Perspective".

But the World Bank report argues that though race-based laws such as the Group Areas Act have been abolished, new laws and regulations give local and provincial officials the incentive to reinforce apartheid settlement patterns. Many provinces employ a regressive land-tax policy for farms, by which taxation for each hectare decreases as property sizes increase. This was initially aimed at discouraging farmers from subdividing their properties into small portions affordable to black buyers.

Last year the Municipal Property Rates Act granted local councils the power to set their own land-tax policy. Few have done so. The report wants treasury and the local government department to develop a land-tax to promote subdivision.

Environmental and heritage regulations come under fire in the report for similar reasons. EIAs are complex and expensive, with costs carried by the applicant. This makes them inherently biased against the poor, the report argues.

The Ethembalethu case illustrates the point. Earlier this year Gauteng's environment department decided the community's EIA, submitted by professional consultants, did not meet the requirements of four laws governing the process, including the Environment Conservation Act of 1989. Specialist studies on visual impact and endangered invertebrates were still needed, a hydrological study done in 2002 was deemed outdated and a public participation process considered flawed. A separate heritage impact assessment was also required.

The community believes officials have caved in to pressure from wealthy landowners who don't want them in their neighbourhood. "We've done all they asked but they keep shifting the goalposts," says community leader Molefi Selibo.

The World Bank report recommends simplifying these approval processes and reducing the number of steps required in an EIA. SA Planning Institute president Ashraf Adam says the Land Use Management Bill, about to go to cabinet for approval, is supposed to unify development approval requirements.

"Fourteen years after democracy we're still sitting with the same legislation that created apartheid towns and settlements, and a new law that does nothing to bring overlapping approval processes together," he says. "It's a mess."

All of which is cold comfort to the squatters of Muldersdrift. "Ten years is a long time to wait," says retrenched domestic worker Agnes Sedibo (53). "If we aren't allowed to build our village this time, I'm going to die."