Prime Minister David Cameron plans to rekindle the council house right-to-buy scheme to generate extra cash to build more homes.
He also said plans would to rolled out to hand house builders thousands of acres of land on a build now and pay later basis.
Together the two measures could create 400,000 industry jobs and deliver 200,000 homes, estimated Cameron.
He pledged the Government would reintroduce bigger discounts for council tenants to revitalise the ailing right-to-buy scheme where take-ups have slumped since Labour reduced the discounts available.
"We need to do everything we can to fire up the engine of the British economy," said Cameron in an interview on The Andrew Marr Show ahead of this week's Tory party conference.
"The housing market isn't working. Why isn't it working? Because of the debt crisis, the banks are bunged up with debt, so the banks aren't lending, the builders aren't building and the buyers can't buy because they can't get the mortgages that they need.
He said: "So this government isn't just sitting back, we are rolling up our sleeves and saying right, we're going to make over government land to house builders on the basis that they can build now and pay for the land when they sell the homes.
"That could build 100,000 homes, 200,000 jobs in our economy."
The scheme was first mooted in March by housing minister Grant Shapps in the hope of overcoming banks' reluctance to lend for speculative housing projects.
The Prime Minister added: "We're not stopping there, we're saying let's bring back the right to buy your council house, with proper discounts that Labour got rid of, and let's use that money to build homes for low rents for families that are currently stuck on housing lists."
"That could provide another 100,000 homes and 200,000 new building jobs."
He added that there were more than 2m council homes still available and right-to-buy could provide a big stimulus to new house building with the Government's pledge for a one for one replacement policy.
Mike Leonard, Modern Masonry Alliance, said "Yesterday the Prime Minster recognised that housebuilding is at the centre of the recovery agenda.
"We are of course delighted that our message is mow understood. We have spoken with minsters over last 24 hours at Conference and we remain very concerned that we have no plan for the here and now.
"The housing market needs to be pump primed now and paid for by the sale of housing stock under a revitalised right to buy scheme."
