China's securities market may soon welcome a fresh flow of money from the country's housing provident fund, official media said Tuesday.

Preparations are under way to revamp management rules of the fund so that the funds could be invested into China's stock market, according to the official Xinhua News Agency, citing an unnamed official with China's securities regulator.

The idea has been discussed by the China Securities Regulatory Commission for nearly a year, according to the report, but the timeline to carry out the new rules remains undertermined.

China has seen a steady growth in the scale of the housing fund recent years, with statistics suggesting a total of 2.1 trillion yuan stayed on the government's books at the end of 2011.

The chunk of the money has been used inefficiently, however, with limited channels to deploy the funds under the current system, which allows only bank deposits and treasury bonds purchases.

Each month, employees and their companies put a certain amount of money, usually no less than 5% of the monthly salary, into the fund managed by a special committee. Housing Fund was initiated in Shanghai in 1991 and was expanded nationwide in 1995.

Meanwhile, the CSRC is working on policies to exploit more uses of the country's insurance capital by increasing investments in equity assets classes which now account for 10% of the total insurance assets, far below the 20% limit, the official said.

Discussions on broader investment channels for pension funds are also underway, he said.