A major expansion in house building is essential for Britain's economic recovery, according to business secretary Vince Cable.
In a speech to the Centre Forum think tank, Mr Cable called for government-backed loans to unlock investment in both social and private housing development.
He said that it had the potential to create a "virtuous circle", providing affordable homes for those in need while driving forward economic recovery.
His comments came after chancellor George Osborne and Bank of England governor Sir Mervyn King announced tens of billions of pounds worth of government support for the banks to lend to business.
Mr Cable said that he wanted to draw on the lessons of the 1930s when a big expansion in home building helped drive the recovery from the Great Depression, accounting for almost a third of the increase in employment.
"There are now some interesting ideas out there for government guarantees (which) could trigger a significant volume of housing investment, replicating the recovery model of the 1930s and leading hopefully to a virtuous circle of new building lending to increased affordability and also increased private demand," he said.
"Construction products account for 20% of manufacturing. Insofar as these ideas reduce uncertainty, they can encourage significant investment from the private sector.
"Recovery requires a big expansion in social and private house building."
Mr Cable added: "Demand has to be created, it does not emerge simultaneously. There is scope here to both create demand and solve a pressing supply need at the same time."