The city has commenced construction work on hundreds of affordable housing units, with the help of a $357 million cash injection from the federal government.

Making the announcement on Thursday, Adam Vaughan, MP for Spadina–Fort York, said the project would include three towers comprising some 761 units, of which 229 are affordable units; 532 market units; and 4,371 square feet of non-residential space.

"We are in a housing crisis in this part of the country," said Vaughan, who is also parliamentary secretary to the Minister of Families, Children and Social Development.

"This investment is wonderful news for the Toronto middle-income families that will move into these new rental housing units."

Mayor John Tory described the announcement as 'a big deal' for the city. (CBC)

The project, located on Block 8 of the West Don Lands in downtown Toronto, will provide affordable housing options close to public transit, schools and services for middle-income families.

Mayor John Tory described the announcement as "a big deal" for the city.

"This investment will positively impact the lives of many residents in our city and ensure that more families have access to affordable and quality housing here in Toronto," Tory said.

The mayor said the project represents the kind of co-operation that can occur between three levels of government and the private sector.

The funding is part of the federal government's national housing strategy, which was announced in November 2017.

The land for the project was donated by the province of Ontario, while the city has also pumped in money to ensure the affordability of a substantial number of units in the development.

More about the project

The 229 affordable units will have rents ranging from average market rent (AMR) for the City of Toronto to 40 per cent of AMR throughout all bedroom types, including three-bedroom and four-bedroom units. The three- and four-bedroom units will account for 45 of the 229 affordable units. All 229 affordable units will be dispersed throughout the three buildings.

The project is designed to achieve a reduction of 17.6 per cent in annual energy use and 19.1 per cent in annual greenhouse gas emissions compared to the National Energy Code of Canada for Buildings (NECB) 2015 building reference.