In a radical new policy shift, not used on this scale since Thatcher and Heseltine started London Docklands, the government will directly commission building of homes on publicly-owned land.

Its ground-breaking new policy is being rolled out as a way to fast-track homes amid growing frustration in Whitehall that large private house builders are failing to deliver enough new homes.

It will target smaller builders and contractors to deliver homes on major schemes. The plan will be backed by an extra 1.2bn fund to build 30,000 affordable starter homes on underused brownfield land by 2020.

Currently the top eight house builders provide half of all new homes. The Government now hopes to enlist an army of smaller builders to deliver its ambitious house building targets.

The first wave of up to 13,000 new homes will start on five sites in the south.

This cash will be used to help kick-start regeneration and secure planning permission in urban areas – renovating disused or under-occupied urban sites so builders can get to work without any delays.

The Prime Minister said: “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 £1.2bn 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.”