The government has published guidance for the establishment of local housing companies (LHC), which will offer affordable housing.
Under the proposals, councils will provide private companies surplus public land for housing development. Each LHC could deliver up to 1,000 homes.
Councils will be consulted on development plans and will be able to dictate the amount of low-cost housing needed to meet local needs.
'Homes needed urgently'
The government says 14 councils have already expressed an interest in running local housing companies.
Ms Cooper said: “We urgently need to build more homes for first time buyers and families. This is a new way to help councils to do their bit to support new homes for key workers and families in their areas.”
The government has set a target for three million more homes to be built by 2020.