Councils should sell off their expensive social housing to fund building cheaper homes, according to an influential think tank.
The Policy Exchange says putting the highest-value properties on the market could raise £4.5bn a year, allowing 170,000 affordable homes to be built.
The organisation, set up by Conservative MP Nick Boles who is a key ally of Prime Minister David Cameron, claims the move could reduce the housing waiting list by up to 600,000 in five years.
Its report, called Ending Expensive Social Tenancies , says properties worth more than the average house price for an area make up one in five of the social housing stock.
The 816,000 homes have a total value of £159bn, £71.9bn of which is in London. Around 3.5% of the buildings become vacant each year and could be sold off to raise the £4.5bn.
This money should be set aside to build extra homes, the report suggests, recommending that spending floors are introduced to ensure standards.
Alex Morton, who wrote the report, said: "Expensive social housing is costly, unpopular and unfair. That is why almost everybody rejects it.
"Social housing tenants deserve a roof over their heads but not one better than most people can afford, particularly as expensive social housing means less social housing and so longer waiting lists for most people in need."
The report claims a sell-off would be "extremely popular" because most people do not believe council house tenants should have homes worth more than the average for their area.
But critics, including the National Housing Federation , have warned it could lead to social cleansing as people are driven out of certain areas.
A major study on housing policy commissioned by the Government called the Montague report is due to be published in the coming weeks.
It is expected to recommend that obligations on developers forcing them to build affordable homes as part of any new schemes are scaled back, in a bid to stimulate activity.
Housing Minister Grant Shapps said the Government is determined to "get Britain building" and help the thousands of families on waiting lists for council houses.
He insisted that the coalition has already introduced radical reforms and invested £19.5bn into affordable housing programmes, which will deliver up to 170,000 homes.
The minister also pointed out that councils can already sell vacant social housing and keep the receipts to invest in redevelopment, regeneration or paying down their housing debt.
