Under the proposals, one in five new homes on sites of 10 of more must be 'starter homes'.
The houses will be available at a minimum 20% discount below market value, helping those on moderate incomes afford their first home.
The move aims to support 200,000 new homes for first time buyers under 40-years-old.
In addition, the initiative will allow injured military personnel and partners of those who lost their lives in service to be eligible for a starter home at any age.
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Housing Minister Brandon Lewis said: "We want to ensure young people who aspire to own their own home can settle down and enjoy the security home ownership brings.
"This is why we have committed to building 200,000 high quality homes exclusively for first time buyers backed by £2.3 billion government funding to get building underway including on brownfield sites."
Other proposed measures include:
• Starter homes can only be resold to other first time buyers, at a discount, for five to eight years after purchase; this is to ensure the homes benefit genuine first time buyers and to discourage speculative buying.
• Restrictions also on sub-letting so starter homes are not buy-to-let opportunities.
• Allowing joint purchasers where one partner is above 40 and one below to be eligible for a starter home.
Consultation on the proposals will run until 18 May.
(LM)
