The pledge has been welcomed by the Get Britain Building Campaign as “innovative approach” to tackling the house building crisis and creating needed jobs.
Shadow chancellor Ed Balls said around £2.5bn of the expected cash windfall should go straight into building 100,000 homes for a mix of shared ownership, affordable rent and social rent.
He said Labour would use a further £500m from the windfall to fund a two-year stamp duty holiday for first time buyers.
Mike Leonard, spokesman for the Get Britain Building Campaign, said: “We are delighted with the major announcement on housing at the Labour Conference today.
He said the plan could deliver an important boost to the house building industry and create hundreds of thousands of jobs, while throwing a lifeline to manufacturing industries like brick and blockmaking.
Leonard said: “It is clear that Labour have fully understood and back one of the key demands of the Get Britain Building Campaign to build more public rented homes as well as boosting the delivery of private homes for sale and rent.
“We stand ready and waiting to play a key role in helping to overcome any barriers and deliver the new homes we so badly need, which will create the jobs and growth which is now so vital for our economy.”
Balls said in his speech to the Labour Party Conference in Manchester: “The need to kick-start the economy is even more urgent.
“With 119,000 construction jobs lost in two years and a 68% fall in the number of affordable homes being built, we need bold and urgent action now.”
He said the Government was anticipating a windfall of between £3bn-£4bn from the sale of the 4G mobile phone spectrum.
“So with this one-off windfall from the sale of the 4G spectrum, let’s cut through the dither and rhetoric and actually do something.”
“Let’s commit that money from the 4G sale and build over the next two years: 100,000 new homes – affordable homes to rent and to buy - creating hundreds of thousands of jobs and getting the construction industry moving again.
“Add to that a stamp duty holiday for first time buyers, and we can deliver real help for people aspiring to get on the property ladder.”
