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Local authorities in England have been told to "move fast" for their share of £127m being made available to fund 2,000 new council houses.
Gordon Brown said that new energy efficient homes would mean "jobs in every part of the country for construction workers".
It was announced on Wednesday that 47 councils will get a share of the money, and will match the government's contribution, bringing the amount spent to £250m.
The funding is part of the £1.5bn for housebuilding that was first detailed by the prime minister in June.
"This is a key part of the government's plan to continue to invest through the downturn to boost our economy and to build Britain's future," Brown said.
"We now need councils to move fast and make the best possible use of this investment, so that together we can meet local housing needs and support the housebuilding industry."
Housing minister John Healey said that the 2,000 extra homes represented the biggest council house building programme "for almost two decades".
But a report published by the Audit Commission said local authorities feel pressured into focusing on building brand new housing.
It said 94 per cent of councils have prioritised new or affordable housing targets, but fewer than a third prioritised targets relating to their existing housing stock.
"This is despite the financial savings, environmental improvements and social benefits of doing so," the commission said.
"If councils thought of housing more broadly, they could do more to combat poverty, ill-health, educational under-achievement and help strengthen their local communities.
"The recession makes a strategic view of housing all the more important."
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