The Northstowe project would see the creation of a new town between Huntingdon and Cambridge.
The Government now wants to commission new homes itself if developers fail to meet the demand for house building and Northstowe could be used for the scheme.
It comes as the Government announced its new national infrastructure plan - which will also see £44 million spent on building a new railway station at Cambridge's Science Park.
Northstowe in Cambridgeshire will be the model for Government plans to take direct responsibility for ensuring the building of new homes,
Plans for 1500 new homes have been approved in South Cambridgeshire. Construction could start on the first phase of the Northstowe development as early as next year.
A housing shortage means 10,000 new homes might have to be built.
Councillors have approved plans to build the biggest 'new town' in Britain since Milton Keynes.
Possible new town for the North West of Cambridge