Investing in house-building would represent the most effective way of stimulating immediate economic growth, and would create jobs and support thousands of small businesses across the country, the campaign group said.
Large scale investment in shared ownership properties would also help boost home ownership levels, which are forecast to slump to their lowest levels since the mid 1980s over the next decade.
The Federation, which represents England's housing associations, has previously warned that the housing market will be plunged into an unprecedented crisis with steep rises in private sector rents, huge social housing waiting lists, and a house price boom – all fuelled by a chronic under-supply of homes.
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Politicians have been debating what mechanisms could be used to kick-start the economy after the UK’s growth forecast was downgraded for the third time by the International Monetary Fund.
Federation Chief Executive David Orr said: "While investment in major infrastructure projects like roads, rail and broadband help improve economic productivity and provide a boost to economic growth, the impact of Government expenditure in these areas of the economy is delayed.
"It might be many years before approval to build new roads and rail links is granted. If government is serious about boosting the economy, housing offers it the best opportunity to deliver growth and new jobs today rather than tomorrow.
"Investment in housing for first time buyers would reap multiple benefits. There is a one-off opportunity to stimulate a wider economic recovery, create jobs and fix our broken housing markets."
Research commissioned by the Federation before last year's Comprehensive Spending Review indicated that for every £1bn pounds invested by the Government in housing delivery, £1.4bn extra spending is generated in the wider economy.
The Home Builders Federation state that every home built creates 1.5 full-time jobs plus up to four times that number in the supply chain. So, increasing the output of homes by 100,000 would generate around 750,000 real jobs.
(CD)
