Prime minister Theresa May announced there will be an extra £2bn available for affordable housing.
Subject to bids from housing associations and councils, the money can be used for social rent.
In her speech to the Conservative Party conference, May said: “We will invest an additional £2bn in affordable housing taking the government total on affordable housing to £9bn.
“We will encourage councils as well as housing associations to bid for this money and provide certainty over future rent levels.
“In those parts of the country where the need is greatest, allow homes to be built for social rent, well below the market level. Getting government back into the market of building houses, a new generation of council houses to help fix our broken housing market.
“Whether you cannot afford to buy a home, stuck in private renting or have been on a council waiting list, help is on the way.”
She also said the government would give councils “new powers” to “ensure developers actually build homes once they are given planning permission to do so.”
Some good news potentially for housing associations too, as she committed to ending the uncertainty around future rents.
Earlier, Damian Green, effectively deputy prime minister, said to the BBC’s Radio 4 Today programme: “It is a significant announcement. This is a Conservative government saying we want to help homeowners in private rent, but we also want to regenerate the social-rented sector as well.
“We believe in building more homes and we think that we need to do this to meet the demand of all types, including council houses.
“You’ll hear today we are going to make it easier for councils to build new houses for rent.
“The things that hold them (local authorities) back will be part of the announcement.
“What we expect to do is start a rebirth of council housing, precisely because one of the duties the prime minister thinks is important for the government to fulfil is precisely to go to those parts of society, parts of the country where often in the past the Conservative party hasn’t addressed.
“The council house announcement will be squarely in that field.
“The prime minister will talk very much about a range of policies that will help that group who have been feeling they have often been left behind, particularly in the housing field.
“They are less likely to own their own homes than their parents did. They feel they are working very hard in their 20s and 30s, but not getting the rewards from society they should get.”