Between 3000 and 4000 low cost homes are going to be built on land occupied by Auckland tertiary institute Unitec.
Housing and Urban Development Minister Phil Twyford has announced the plan, which he said would help address the city's housing shortage.
The development would pop up on Unitec's Mt Albert campus and was the first phase of the Government's KiwiBuild programme.
The land is owned by Unitec but would be transferred to the Crown.
Twyford said too many Aucklanders were suffering because of the housing crisis.
"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.