More than 10,000 new homes will be built on public land through Government direct commissioning in a plan David Cameron hailed as a "huge shift".
The Prime Minister will announce the proposal on Monday, claiming it marks the biggest of use of such a policy since Margaret Thatcher and Michael Heseltine started the regeneration of London's Docklands in the Eighties.
Downing Street said the "radical" move will see homes being built at a faster rate with smaller building companies that cannot take on big projects able to begin construction on Government sites which already have planning permission.
The policy will be backed by an extra £1.2 billion to prepare brownfield sites for the building of 30,000 starter homes - available to first time buyers under 40 for at least a 20% discount - over the next five years.
Mr Cameron said: "This Government was elected to deliver security and opportunity - whatever stage of life you're at. Nothing is more important to achieving that than ensuring hard-working people can buy affordable homes.
"Today's package signals a huge shift in government policy. Nothing like this has been done on this scale in three decades - government rolling its sleeves up and directly getting homes built.
"Backed up with a further £1.2 billion to get homes built on brownfield sites, it shows we will do everything we can to get Britain building and let more people have the security that comes with a home of their own."
The construction of the first wave of up to 13,000 directly commissioned homes - 40% of which will be starter homes - will begin this year in Dover, Chichester, Gosport, Northstowe in Cambridgeshire and Old Oak Common in north west London.
In addition to these, the extra £1.2 billion will fast track the creation of at least 30,000 new starter homes and up to 30,000 market rate homes on 500 new brownfield sites by 2020.
The new projects form part of the Government's commitment to building 200,000 starter homes before the end of the Parliament.
Half of all new homes are constructed by the top eight house builders and the direct commissioning approach will help smaller builders and new competitor firms, according to No 10.
Brian Berry, chief executive of the Federation of Master Builders (FMB), said: "When it comes to building new homes, the availability of small sites is the single biggest barrier to SME (small and medium sized) house builders increasing their output.
"Any measures that the Government can introduce that will increase the number of small sites suitable for SME house builders will help address the housing shortfall.
"It is also encouraging that the majority of these sites will already have planning permission in place as obtaining permission is all-too-often a lengthy and protracted process - avoiding this time delay should help house builders increase their supply much more quickly."
Jeremy Blackburn, head of policy at the Royal Institution of Chartered Surveyors (RICS), said: "This Government has already introduced a great many initiatives that we believe will slow current high rates of house-price growth.
"Today's announcements will further help to bring much-needed new developments swiftly to market."
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.
"With home-ownership down to the lowest level in a generation and fewer homes built over the last five years than under any peacetime government since the 1920s, David Cameron needs to do much more to fix his five years of failure on housing."