The government has pledged £11.5 billion to build up to 180,000 discounted homes over the next five years.
The new homes are designed to help first-time buyers to take their first step on the property ladder with half being available to buy through affordable home ownership schemes.
Most of the rest will be given over to discounted or social rentals, which are typically 50% to 60% cheaper than private rentals.
With 10% set aside for supported housing for those with physical or mental health challenges.
Making the announcement Housing secretary Robert Jenrick said: “Today’s announcement represents the highest single funding commitment to affordable housing in a decade and is part of our comprehensive plans to build back better.
“This government is helping hard-working families and prospective first-time buyers get their feet on the housing ladder in an affordable way.
“Thanks to the range of flexible ownership options being made available, more families across the country will be able to realise their dreams of owning their own home, with half of these homes being made available for ownership.”
A new shared ownership scheme has reduced the minimum initial share of the overall price of the property from 25% to just 10%.
Additional shares in the homes can be bought in 1% instalments with heavily reduced fees. Repairs and maintenance will be covered by the social landlord for the first 10 years.
The new housing will be delivered by an Affordable Homes Programme between 2021 and 2026, A prospectus will invite councils, housing associations and private providers to start preparing their bids.
The funding is part of the Homes England affordable housing programme which has been designed to address the falling levels of home ownership.
Since the 1990s the proportion of under 35s owning their own home has dropped from 65% to 27%.
A consultation is planned on how to make the housing provided more accessible for the elderly and those with disabilities.
Nick Walkley, chief executive of Homes England, said: “The fund will support improved productivity in construction and unlock new economic opportunities across the country.
“Despite the challenges of Covid-19, this long-term funding settlement gives our partners the confidence they need to invest in new homes and the communities they work for.”
The need for more social housing is illustrated by the one million people currently on the social housing waiting list and housing charity Shelter has warned that a quarter of a million people have fallen into rent arrears because of the pandemic.
Chief executive Polly Neate said: “With an unprecedented recession underway, major job losses on the horizon, and a housing emergency about to spin out of control, the government must invest more in social housing than its current plans allow for.
“Social homes are designed to be genuinely affordable, which is exactly what we need right now. Discounted homeownership schemes are not.”