CAIRO (Reuters) - The World Bank approved a $500 million loan to help Egypt finance the construction of one million housing units for low-income residents over five years, the country's housing minister said on Wednesday.

"Between 25 and 40 percent of the loan will be given immediately. It will be directed towards building some units ... and providing subsidies," Mostafa Madbouly said in a statement.

Egypt, with a burgeoning population of nearly 90 million and poverty levels hovering around 40 percent, is pursuing a number of projects aimed at easing a shortage of affordable housing that has been a grievance of young Egyptians for decades.

Last month, Dubai builder Arabtec said it was in talks with several local and international banks to finance the first phase of its project to build another one million housing units in Egypt.

The World Bank said in a statement on Tuesday its board of directors had approved the loan to improve access to home ownership and rental units for low-income households in Egypt.

"The Egypt Inclusive Housing Finance Program ... will reach 3.6 million people, including an estimated 1.6 million beneficiaries living below the poverty line," it said.

Madbouly said 170,000 units would be completed by the end of the year, bringing the total number of finished units to 250,000.

($1 = 7.6300 Egyptian pounds)