Wigan is set to get its first new council homes for 20 years.
Council chiefs have given the green light to plans for Wigan and Leigh Housing, which manages the council's 23,000 properties, to build new homes across the borough.
Wigan and Leigh Housing will shortly start consulting with residents over five possible sites.
It will bid for funds to the new Homes and Community Agency (formerly the Housing Corporation) in January and if successful the first phase of building could start as early as next autumn.
While the final number of homes is still to be confirmed it is likely to be around 50 in the first year with more bids being made in future years.
A report to the council's cabinet revealed that homelessness in Wigan is at historically high levels and the demand for social housing has never been greater – a situation that is likely to grow worse as the credit crunch bites.
Figures in the report reveal the stark crisis facing housing officials unless action is taken – the estimated gap between supply and demand for affordable housing has rocketed from seven per year in 2003 to a staggering 417 in 2008.
The popular right-to-buy scheme has led to somewhere in the region of 11,000 affordable homes being lost from the social housing market since it was introduced.
A recent council survey revealed that more than eight out of 10 new households in the borough have incomes below the level needed to be able to buy and 66 per cent are even struggling to afford to rent privately.
Cabinet member for neighbourhoods Coun Kevin Anderson said: "The rise in house prices over the last few years has made it much harder for first time buyers. We have a duty to help.
Click next page for more ..."There is clearly an ever growing demand for social housing which these new homes will help to meet.
"It will also be good for jobs and we are expecting that contractors use local labour as far as possible."
The last homes built by Wigan Council were in Hindley Green in 1985. Since then changes in government policy, 'right to buy' rules, which led to thousands of council houses being sold off and a drop in demand for social housing, have led to an effective moratorium on all new building.
Coun Terry Halliwell, the cabinet's link with Wigan and Leigh Housing, said: "There is a desperate need for good quality social housing and we are pleased that the government has responded to our needs and concerns by opening the doors to letting Wigan and Leigh Housing bid for grants to build affordable homes.
"While this is a modest start, hopefully in future years we will be able to expand the programme through a partnership between the council and Wigan and Leigh Housing."
The cost of building the new homes would be met by the council through its programme of capital works, borrowing and grants from the Homes and Community Agency.
Independent Coun Gary Wilkes said the plans would almost certainly receive cross-party support and threw his full support behind the proposals.
The Bryn councillor said: "I'm really excited that the council could start building social housing again, I think it's long overdue. One of the biggest issues we come across as councillors is housing.
"We are hoping to get a local workforce to build them, which is another plus for the local economy.
"Everything depends on the government giving them credit. They are funding the majority and WALH are funding some.
"It's very much a pilot scheme. I know it will be a success.
"Apparently the loop hole will be closed for the right-to buy. I support right-to-buy, I think everyone should buy if they can afford to but we don't really want to sell these because it wouldn't be addressing the problem of losing social housing.
"The council is also looking at buying back ex-council properties that are now vacant and up grade them and put them back on the social market."