First-time buyers struggling to afford a home will be offered new help under a five-year plan unveiled by Deputy Prime Minister John Prescott.
Labour says it wants to help more onto the housing ladder
Up to 300,000 council and housing association tenants in England will be able to buy a share in their home.
Mr Prescott told MPs up to 80,000 families would be helped onto the property ladder by 2010.
A new first-time buyers initiative will allow people to pay a sum reflecting the £60,000 construction cost.
Mr Prescott also announced a competition to get house builders to construct environmentally efficient, quality homes for £60,000.
Surplus government land will be used to build around 15,000 cheap starter homes.
The news comes after a survey suggested first-time buyers cannot afford to buy a home in 92% of UK towns.
'Not for sale'
Average-priced homes in 548 out of 597 main UK postal towns were beyond the means of people on average salaries, according to the study for the Halifax Bank.
Conservative spokesman Caroline Spelman said the government had put home ownership beyond the reach of a generation.
There was a "housing crisis which has spiralled out of control" which Ms Spelman blamed on Labour ministers.
Liberal Democrat spokesman Ed Davey accused Mr Prescott of being engaged in a "manifesto war" with Labour election supremo Alan Milburn who reportedly wanted an extension of the right to buy.
"John Prescott's struggle with Alan Milburn over right to buy has left real housing solutions, like re-using empty properties, sidelined," said Mr Davey.
First right of refusal
On Monday, Mr Prescott announced that council and housing association tenants will be able to buy a share of at least 50% of the value of their home.
When they moved, the council or housing association would have first right of refusal to buy the share back.
Earlier visiting a housing project in west London, Tony Blair said: "If you are a young couple struggling to make ends meet and get your feet on the housing ladder, it's very difficult."
There are 1.45 million housing association homes in England.
As part of a new twin-track approach, Mr Prescott also wants to build starter homes on land owned by the government, public agencies and local councils.
Housing charities want to see more cheap rented housing for homeless people, especially after the number of people in temporary accommodation passed 100,000 for the first time last month.
Shaks Ghosh, chief executive of Crisis, said: "The worry is that pre-election propaganda is going to play more to homeowners and the emphasis will be more on home ownership."
The Campaign for the Protection of Rural England welcomed plans to give housing association tenants a stake in their homes.
But it argued ministers should be "more ambitious" about making use of previously brownfield land.
A spokesman for the Royal Institution of Chartered Surveyors urged a review of the stamp duty threshold which is currently set at £60,000.