People who live in council houses should be made to feel proud of their homes, Theresa May has said.
The PM announced £2bn to build new homes in England, in an attempt to remove the "stigma" of social housing.
Under the plan, housing associations, councils and other organisations will be able to bid for the money to spend on new projects, starting from 2022.
Labour said the announcement fell "far short" of what was needed for the social housing sector.
BBC home editor Mark Easton said the government hopes the money will allow local authorities and housing associations to build schemes that would otherwise seem too risky.
He said the sector's calls to provide more confidence about future funding - so the 300,000 extra homes required in England each year can be built - had appeared to have been listened to.
Mrs May told a National Housing Federation summit in London: "Some residents feel marginalised and overlooked, and are ashamed to share the fact that their home belongs to a housing association or local authority.
"On the outside, many people in society - including too many politicians - continue to look down on social housing and, by extension, the people who call it their home."
She will encourage housing associations to change how tenants and society view social housing.
"We should never see social housing as something that need simply be 'good enough', nor think that the people who live in it should be grateful for their safety net and expect no better," she said.
"I want to see social housing that is so good people are proud to call it their home... our friends and neighbours who live in social housing are not second-rate citizens."
In mixed developments, she said it should be impossible to tell the difference between full-price and affordable housing, which should not be "tucked away out of sight and out of mind".
David Orr, chief executive of the National Housing Federation, said the prime minister's announcement was "extremely welcome".
"This represents a total step change. For years, the way that money was allocated meant housing associations couldn't be sure of long-term funding to build much-needed affordable housing," he said.
He said that by changing the way the funding was allocated, ministers had given "long-term confidence and confirmed that we are trusted partners in solving the housing crisis, building new homes and communities".
Polly Neate, chief executive of housing charity Shelter, said it was welcome that the government was "starting to get serious" about correcting the "historic failure" to build social homes.
"This must be the start and not the end," she said.
Shadow housing secretary John Healey said the reality was spending on new affordable homes had been "slashed" and the number of new social rented homes built last year "fell to the lowest level since records began".
"If Conservative ministers are serious about fixing the housing crisis they should back Labour's plans to build a million genuinely affordable homes, including the biggest council house-building programme for more than 30 years," he said.
The English housing survey for 2016/17 reported that 3.9 million households - about nine million people - lived in the social rented sector, which was 17% of households in the country.
Analysis: How many people are waiting for social housing?
By Reality Check team
While it's estimated that housing associations now build around 17% of homes, many people are on waiting lists for social housing.
Over the last 20 years, the number of households in England on local authorities' waiting lists has increased from 1,021,664 to 1,155,285 in 2017.
According to government figures, the number peaked in 2012 at 1,851,426.
A study by housing charity Shelter found that Newham in central London saw the highest demand for social housing in 2017. 588 homes were available for social rent, while over 25,000 households were on the waiting list for these properties.
The charity says that longer waiting lists are forcing more people into private rented accommodation. It estimates that over 1.6 million people in England now rely on housing benefit to help with keeping up with rent payments.
The funding covers the next spending review period, from 2021 through to 2028.
Downing Street said the money was separate to the £9bn of public funding put toward the existing affordable homes programme until 2022.