The London mayor Sadiq Khan is teaming up with housing association L&Q to invest £8bn in 20,000 homes in the city, of which 12,000 will be affordable homes.
In his Autumn Statement last year, chancellor Philip Hammond set aside £3.15bn as a fund for building 90,000 affordable homes in the capital by 2020-21.
The deal with L&Q is the first Khan has made using that money, contributing £400m towards L&Q's investment into London.
L&Q said it will also be investing in construction skills and training as part of the strategic partnership with the mayor. The housing association has invested £2bn into London in the last five years, so this latest commitment is a big step-up for the group.
The homes will be spread in developments across London, and the mayor's office is currently in talks with L&Q about where the sites should be. L&Q owns land along the Barking riverside, so it is expected that at least some of the homes will be built there.
The tenure mix for the developments also hasn't been specified yet. But the mayor has been aiming for a combination of homes rented out at the London living rent (which is a third of average salaries in the area), and shared ownership properties.
Khan said: "For too long, London has not been building enough homes. This has meant Londoners born and raised in our great capital have struggled to rent and stood little or no chance of owning a home in their own city.
"I welcome L&Q's commitment and significant investment in building new and genuinely affordable homes for Londoners. This announcement today demonstrates real progress on the long road towards tackling London's housing crisis and signals my intention to work with housing associations to deliver thousands of homes with at least 60 per cent being affordable."
The London Plan stipulates that there should be 17,000 affordable homes built a year across the city, but the mayor is redrafting that target because it is not ambitious enough. He is aiming to make sure 50 per cent of homes built in London affordable.