It will do this by directly commissioning the development of land itself, rather than relying on large building firms.
Currently 50% of house building is managed by the UK’s eight largest construction companies.
Under the new scheme smaller developers, who will commit to ensuring 40% of properties built are suitable for first time buyers, will be able to buy land with planning permission in place.
The move has been cited as a “radical new policy shift”. Five publicly owned land sites have been identified and the plan will see 13,000 new homes being built on this land.
In addition there are government plans to create 200,000 starter homes by 2020 which will be sold at a discount to first time buyers under the age of 40.
David Cameron said: “There are hundreds of thousands of Londoners in their 20s, 30s, sometimes in their 40s, who are living in rented accommodation who would love to be able to own their own homes.”
The government are also set to announce a £1.2bn fund to help developers prepare underused brownfield land for building.