He said this is a bid to support growth and improve affordability in the housing market.
Now, developers will be given the opportunity to 'buy now, pay later' when it came to building.
He also outlined plans to boost the 'right to buy' council house scheme introduced under Margaret Thatcher's government in the 1980s, as part of plans to boost the economy.
Cameron made the announcement to increase discounts to encourage council tenants to buy their own homes as the Conservatives prepared for the first day of their annual party conference.
"We need to do everything we can to fire up the engine of the British economy," said Cameron in an interview on The Andrew Marr Show on Sunday.
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"There's a step-change taking place right now," he said.
The bid to develop underused 'brownfield' sites meanwhile could create 200,000 extra homes and 400,000 extra jobs.
He also said that, for every home sold under the scheme, the Government would build a new home under the affordable rent model, the first round of funding for which is currently being awarded.
He added that the 'build now pay later policy' - whereby developers only pay for land when the properties they have built are sold - would also help boost the sector.
Mr Cameron said: "The housing market isn't working. Why isn't it working? Because of the debt crisis, the banks are bunged up with debt, so the banks aren't lending, the builders aren't building and the buyers can't buy because they can't get the mortgages that they need.
"So this government isn't just sitting back, we are rolling up our sleeves and saying right, we're going to make over government land to house-builders on the basis that they can build now and pay for the land when they sell the homes.
"That could build 100,000 homes, 200,000 jobs in our economy.
"We're not stopping there, we're saying let's bring back the right to buy your council house, with proper discounts that Labour got rid of, and let's use that money, as people choose to buy their council home, let’s use that money to build homes for rent, for low rents for families that are currently stuck on housing lists," he said, yesterday.
(BMcC/CD)
