The government will "directly commission" the construction of 13,000 new homes on public land, David Cameron has announced.
The Prime Minister said the government was taking responsibility to help smaller businesses and improve the speed of house building.
At least 40% of the 13,000 homes will be affordable 'starter' homes for first-time buyers. The government plans to build 200,000 starter homes by 2020, which will see first-time buyers under the age of 40 given at least a 20% discount on the asking price.
Mr Cameron said the government was "rolling its sleeves up" when it comes to house building.
The houses will be built on five public sites in north west London, Dover, Cambridgeshire, Chichester and Gosport.
The Prime Minister also said £1.2 billion worth of funding would help to build 30,000 starter homes on underused brownfield sites across the country.
Communities Secretary Greg Clark said: "Today's radical new approach will mean the government will directly commission small and up-and-coming companies to build thousands of new homes on sites right across the country/
"This, and the £1.2bn new Starter Homes Fund, will help thousands of people to realise their dream of owning their own home."
Reacting to the announcement, shadow housing minister John Healey, said: "In the Autumn Statement a few weeks ago, George Osborne tried to spin his halving of public housing investment as an increase. Now David Cameron is laying on the rhetoric to hide his failure on new homes.
"Today's statement promises no new starter homes beyond those already announced."