The NSW Government says Sydney is on the brink of its biggest-ever housing construction boom, which will see almost 200,000 homes built over the next five years.

Key points: Almost 200,000 new homes to be built in Sydney

Almost 200,000 new homes to be built in Sydney Construction timeline of five years

Construction timeline of five years Dwellings will be mainly apartments, townhouses

Planning Minister Rob Stokes said the homes would be mostly apartments and townhouses, and described the blueprint as a win in the "war against sprawl".

He said more than 184,000 homes would be built by 2020/21 to address the shortage of affordable homes.

Development will focus on Parramatta, Blacktown and the City of Sydney.

Mr Stokes said the 84 per cent boost in construction would take place on land already zoned for residential purposes with existing utilities available and transport infrastructure either in place or planned.

He said the Government was spending $73.3 billion on infrastructure over the next four years, including projects like the Sydney Metro, that would "support growth in the right areas".

"One of the really interesting things about these statistics is that they show we are finally winning the war against sprawl," the Minister said.

"While there will continue to be opportunities to buy detached homes on the blocks on the fringes of Sydney, there's a real focus on apartments, on terrace houses and on medium-density developments in established areas."

NSW Minister for Planning, Rob Stokes, says the housing boom will be Sydney's biggest ever. ( Fairfax Media: Kate Geraghty )

Smaller, cheaper houses needed

The Government said there was an undersupply of 100,000 homes in the state, with an ageing society and households in need of affordable and smaller houses.

"We're in a period of unprecedented growth and change and this is the first time in the history of the city that we've seen a pipeline of housing as big as this one," Minister Stokes said.

"The strategic importance of providing this much housing supply is that we know that one of the critical challenges we face is a lack of affordable housing.

"One of the key ways we can help to address that problem is by providing a greater supply of housing and a greater supply of a different variety of housing."