"This Government will not sit around while children are living in cars and families are cramped into overcrowded housing," he said.
"We need bold action to solve this."
The homes would be a mix of public housing, open market houses and homes purpose-built for first time buyers.
Twyford said the Government was working with the Iwi of the Ngā Mana Whenua o Tāmaki Makaurau to ensure the development was consistent with their Treaty settlement.
Unitec chairwoman Dr Lee Mathias said the introduction of new homes would create a "vibrant space" around the campus.
"All proceeds of this sale will support the delivery of our teaching and learning programmes," Mathias said.
Prime Minister Jacinda Ardern would officially welcome the announcement at Unitec's Te Noho Kotahitanga Marae this morning.