Theresa May is pledging to support local authorities in building a new generation of council houses for rent if the Conservatives are returned to power in the election on June 8.
With more than a million families stuck on council waiting lists, the Prime Minister said the housing market was "broken" and vowed to fix it.
The move will be seen as a dramatic break with the legacy of Margaret Thatcher, who introduced the right to buy for council tenants in the 1980s – blamed by critics for the steep fall-off in council house building which followed.
The Conservatives offered little detail as to the scale of the programme, saying simply they expected thousands of homes to be built each year with hundreds of millions of pounds invested over the course of the next parliament.
In contrast, Labour has said that it wants to see at least a million new homes built over the next five years, with at least half of them council houses.
Shadow housing secretary John Healey dismissed the PM's pledge as "spin without substance".
Nevertheless, the proposal will be seen as another move by Mrs May on to traditional Labour territory as she seeks to maximise the Tories' appeal in the remaining weeks of the campaign.
The Prime Minister said: "Whether you rent or buy, everyone needs the security of a place to call home but too many ordinary working families are stuck on council waiting lists, facing unaffordable rents and struggling to save for that first deposit.
"That's why we will fix the broken housing market and support local authorities and housing associations to build a new generation of council homes right across the country."
Under the Conservative plan, the Government would look to strike deals with councils and housing associations, providing support - both through direct funding and extra borrowing - to build new homes.
A proportion of the properties would be required to have a fixed term social rent - typically 10 or 15 years - at which point they would be sold with the tenant being given the first option to buy.
The Tories said the requirement to sell would ensure developers considered the private sale value of the property, leading to higher quality homes, while the proceeds would be reinvested over time in new social housing.
In a further incentive, the Conservatives said they would reform the rules on compulsory purchase orders, making it easier and cheaper for councils to acquire brownfield land for building.
The party believes the move will help reverse the decline in council house building, which has fallen from more than a million homes a decade in the 1960s and 1970s, to just a few hundred a year.
According to figures released by the party, there are currently 300,000 fewer homes for social rent than there were 20 years ago while there are 1.2 million families on local authority waiting lists for a social tenancy.
Mrs May said: "Giving tenants a new right to buy these homes when they go on the market will help thousands of people get on the first rung of the housing ladder, and fixed terms will make sure money is reinvested so we have a constant supply of new homes for social rent.
"It is part of my determination to build a better Britain our children and grandchildren are proud to call home and where everyone has the chance to get on in life."
Mr Healey said: "This is political spin, with no substance. There's no commitment on the number of new affordable homes or on new funding.
"Under Theresa May and the Tories we've seen seven years of failure on housing, with the level of new affordable housebuilding now at a 24-year low."