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The Prime Minister (PM) David Cameron will later announce the new policy today, 04 January.
The scheme will target small builders and contractors to build homes on large projects.
It is understood the Government is making the move due after becoming frustrated that private house builders are failing to deliver enough new housing.
A move on this scale has not been seen since the London Docklands Development Corporation in the 1980s.
It will be backed by a £1.2 billion starter home fund which will build 30,000 'affordable' starter homes on 500 new brownfield sites by 2020.
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The direct commissioning pilot will begin on five publicly owned sites including:
• Connaught Barracks in Dover
• Northstowe in Cambridgeshire
• Lower Graylingwell in Chichester
• Daedelus on Waterfront in Gosport
• Old Oak Common in north west London
PM David Cameron said: "Today's package signals a huge shift in government policy. Nothing like this has been done on this scale in 3 decades – government rolling its sleeves up and directly getting homes built.
"Backed up with a further £1.2 billion to get homes built on brownfield sites, it shows we will do everything we can to get Britain building and let more people have the security that comes with a home of their own."
Brian Berry, Chief Executive of the Federation of Master Builders (FMB), added: "When it comes to building new homes, the availability of small sites is the single biggest barrier to SME house builders increasing their output.
"Any measures that the government can introduce that will increase the number of small sites suitable for SME house builders will help address the housing shortfall.
"It is also encouraging that the majority of these sites will already have planning permission in place as obtaining permission is all-too-often a lengthy and protracted process – avoiding this time delay should help house builders increase their supply much more quickly."
(LM)
