Deputy Prime Minister Nick Clegg announced an extra £225m in funding to unlock a series of stalled major local housing projects in a speech to the National House-Building Council.
He also said that plans for new garden cities and suburbs need to be brought forward to tackle the housing crisis.
The Government hopes the funding will unlock up to 48,600 new homes.
He said: ” Right now, the numbers are not looking good. We’re already building 100,000 fewer houses than we need each year. Over the next decade, each year, the UK’s going to grow by around 230,000 households. Last year we managed to complete 117,000 – just over half.
“The credit crunch has certainly exacerbated the problem – with mortgages and deposits harder to come by. But this housing crisis has been a long-time in the making: we’ve been under-building for decades.
“Unless we take radical action, we will see more and more small communities wither, our big cities will become ever more congested as we continue to pile on top of each other, and the lack of supply will push prices and rents so high that unless you or your parents are very rich, for so many young people, living in your dream home is going to be a pipe dream.”
The latest funding supplements kick-start cash already released, but will be targeted at larger schemes of 4,000 – 9,500 homes.
Clegg confirmed that the European Investment Bank will be injecting £400m into the UK affordable housing sector by next March to help deliver new energy efficient affordable homes.
The government funding, he said, will also leverage private investment to effectively get projects moving.
“We will work with prospective developments and ensure that any public sector investment secures value for money from the taxpayer. And once these developments are complete, the taxpayer will get that money back.”
Clegg confirmed that the Government is committed to running a competition to promote a wave of larger-scale projects where there exists clear local support and private sector appetite.
“We can either condemn ourselves to haphazard urban sprawl – the surest way to damage the countryside, we can cram ever more people into existing settlements, concreting over gardens and parks – and bear in mind we already build the smallest homes in Western Europe, or we can build places people want to live.
“This isn’t just about bricks and mortar. it’s about giving British families the homes they need. Giving children new communities to grow up in. Creating places that will grow and thrive and become part of the fabric of this great country.”