London Mayor Boris Johnson has announced a £5bn investment plan which includes the building of 50,000 affordable homes by 2011.
Mr Johnson wants to increase home ownership opportunities in London by raising the household income limit to £72,000 for low cost ownership schemes.
He also wants to deliver thousands of new homes for social rent.
The London Assembly Labour group said his strategy should be prioritising much-needed affordable rented housing.
The draft strategy will see the Mayor working closely with the Homes and Communities Agency (HCA), investing nearly £2bn every year from the London housing budget to deliver new homes and improve existing homes.
Mr Johnson said: "The strategy focuses not only on the issues facing the housing market in these difficult times but the historic problems of affordability, homelessness and overcrowding.
"It is designed to meet the needs of Londoners aspiring to get a foot on the housing ladder."
But Nicky Gavron, of London Assembly Labour group, said in the wake of the economic downturn it was crucial the mayor got it right.
"The impact of the credit crunch on every aspect of the housing sector cannot be underestimated - yet the demand for housing, particularly affordable rented housing - has never been higher.
"Over a third of a million Londoners are waiting for social housing yet the Mayor's housing adviser has made it clear they will not impose any target for rented homes on London councils."
Jenny Jones, London Assembly Green Party Member, said 20,000 social rented homes need to be built a year in order to meet London's social housing.
Adam Sampson, chief executive of Shelter, said: "Shelter welcomes the mayor's commitment to increasing the number of social rented homes, especially family-sized homes.
"With more than 53,000 homeless families living in temporary accommodation and hundreds of thousands more living in overcrowded conditions, the need for more social rented housing in the capital is greater than ever."
As part of his election pledges the Tory mayor had promised that boroughs would deliver 50,000 affordable homes and bring 84,000 empty council homes back into use.
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