The NSW opposition says it would set aside at least a quarter of new properties constructed on government owned land for affordable housing if elected.
NSW opposition leader Luke Foley said on Sunday that Labor would also designate 15 per cent of privately owned land to be rezoned for housing to affordable housing.
Mr Foley believes the measures would generate close to 25,000 affordable homes each year.
The announcement was welcomed by the St Vincent de Paul Society chief executive Jack de Groot as the most "significant and ambitious plan that any state in Australia has proposed".
"The opposition's target to deliver close to 25,000 affordable homes each year will meet the needs of the 60,000-plus applicants now waiting for social housing in NSW," Mr de Groot said in a media release.
"Average waiting periods exceed 10 years in Sydney and other areas of highest need."
However, Housing Minister Anthony Roberts said the plan lacked detail and failed to address the underlying supply issues affecting housing affordability.
"Their policy of making the government compete with the private sector to sell homes will fail miserably at best," Mr Roberts said in a statement.
"At worst, it will fail expensively as the government subsidises construction it can't afford."