Thousands of homes are to be built by central Government for the first time in a generation in attempt to ease the chronic national housing shortage.
A small town containing up to 10,000 properties will initially be developed at a derelict RAF base in Cambridgeshire, one of England's fastest growing counties.
But ministers are keen to extend the scheme, which they claim will halve the time it takes to build a property, across the country.
It will be the first time since the 1970s, and the construction of the new town of Central Lancashire, that the Government has taken direct charge of house-building.
Danny Alexander, the Chief Secretary to the Treasury, said the failure of private companies to meet the demand for 300,000 new homes a year had prompted the Government to adopt a radical new approach.
He said: "The message to the house-building sector would be simple: if you don' build them, we will."
A pilot project has been launched to the north of Cambridge on the site of the former RAF base at Northstowe, creating the largest planned town since Milton Keynes was built in Buckinghamshire.
The Homes and Communities Agency, an arms-length Government body, will lead on the scheme, deciding the mix of properties to be developed and commissioning builders, as well as planning the infrastructure, including roads and water supplies, required by the new town.
Under the scheme, which only applies to England, the houses would then be sold to the private sector.
Mr Alexander said the Government had released sites for around 100,000 houses since 2010, but now wanted to take a "much more ambitious approach".
He said: "This is the first time in a generation the Government has owned land, led the development on it at this scale and considered commissioning homes directly.
"We are examining in more detail the idea of direct commissioning as a solution for the whole country and piloting it on this enormously important site."
Grainia Long, chief executive of the Chartered Institute of Housing, said: "We've been failing to build the number of new homes we need for decades. The result is a housing crisis in which millions of people are being priced out of a decent home.
"We need radical solutions if we are to have any hope of solving this crisis within a generation. So the Government pilot to directly commission 10,000 new homes at Northstowe and to examine the potential of this model on a bigger scale is a very welcome development."
Mr Alexander detailed the initiative as he launched the National Infrastructure Plan, which includes road projects worth £15bn, flood defences costing £2.3bn and energy programmes.
It also confirmed that a new garden city would be developed at Bicester, Oxfordshire, containing up to 13,000 homes, funded by a mixture of public spending and loans.
Brian Berry, the chief executive of the Federation of Master Builders, said: "Given the scale of the housing crisis we face, I'm encouraged to see housing considered alongside long term infrastructure planning."