The government is "pulling out all the stops" by directly commissioning the building of up to 13,000 homes on public land, ministers say.
Smaller developers will be able to buy sites in England with planning permission in place - with 40% of the new-builds to be so-called "starter homes" aimed at first-time buyers.
PM David Cameron said it was a "huge shift in government policy".
But Labour said he was using "rhetoric to hide his failure on new homes".
Shadow housing minister John Healey said the announcement did not promise new investment or affordable homes beyond those already announced.
Direct commissioning allows the government to assume responsibility for developing land, instead of large building firms.
Communities Secretary Greg Clark told BBC Radio 4's Today programme the government was "pulling out all the stops to get the country building".
"We know that consistently 90% of people aspire to own their own home, and for many years now home ownership has been in decline," he said.
He added that the eight biggest building firms accounted for 50% of the house-building market, and there was a need to involve smaller and medium-sized companies.
Downing Street said the move marked a "radical new policy shift", with up to 13,000 homes set to be built on five publicly-owned sites in 2016 - with up to 40% being affordable "starter" homes.
In December 2014 former Lib Dem chief secretary to the Treasury Danny Alexander announced a pilot plan for the government to "directly commission, build and even sell homes" at a former RAF base in Northstowe, Cambridgeshire.
BBC home editor Mark Easton said the extent of government involvement marked something of an ideological shift for a Conservative administration, adding that starting 13,000 homes represented a "tiny proportion" of the million the government wants built by 2020.
The government wants to build 200,000 starter homes - to be offered to first-time buyers under 40 at a minimum 20% discount price - by 2020.
The discounts apply to properties worth up to £250,000 outside London, or £450,000 in the capital.
A pilot for the scheme will start on five sites:
- Brownfield land at Old Oak Common, in north-west London
- Former Connaught Barracks, in Dover
- Ex-MoD land at Northstowe, in Cambridgeshire
- Former hospital site at Lower Graylingwell, in Chichester
- MoD site at Daedelus Waterfront, in Gosport
Critics of the starter homes scheme say they are still too expensive for many people to afford.
Speaking on a visit to a housing development in Barking Riverside, east London, Mr Cameron said affordable housing was "a house that someone can afford to buy or afford to rent".
"Sometimes I think we get too hung up on these definitions," he 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 CBI said the announcement "should be a real spur to our ability to build more homes". Housing charity Shelter said it was a "welcome step" but added that starter homes "simply won't be affordable to the vast majority of people in this country".
The government will also announce a £1.2bn fund to help developers prepare underused brownfield land for building.
The move will fast-track the creation of at least 30,000 new starter homes by 2020, Downing Street said.
New homes 'failure'
Shadow housing minister John Healey told BBC News: "If new announcements built new homes, the government would have solved the housing crisis by now."
He described it as a "drop in the ocean" compared with the number of homes needed.
Labour said home ownership was at its "lowest level in a generation".
Mr Healey added: "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."