ACT Opposition Leader Elizabeth Lee said the development of a new town centre at Kowen Forest could add 100,000 dwellings to the ACT's housing stock.
This would account for up to 80 per cent of future housing in the territory under the party's plan to add 125,000 new homes over the next 25 years.
But the Liberals' plan has been strongly criticised by Labor, with Planning Minister Chris Steel saying the development would take too long to deliver housing.
"This is straight out of the conservative Canberra Liberals playbook ... this won't deliver any new housing that we need now. It's a plan for 25 years for a disconnected and dormitory suburb," Mr Steel said.
"Canberra is a very spread out place and we can't continue to sprawl out into nature reserves or areas like Kowen that are used by the community for recreation."
Ms Steel said any development would require significant work to add utilities and a massive investment into transport links would be needed.
Ms Lee said on Thursday the development of Kowen was a long-term plan.
"We will start to look at the planning and preparation work to ensure that we have everything under way ... it won't be in the first term," she said.
The Kowen Escarpment Nature Reserve and Molonglo Gorge would be protected from development.
Ms Lee said the party would work to develop better connections from the territory into the district. It is currently only accessible by road through NSW.
"The best thing about starting a district centre or a town centre from scratch is that we do have at our disposal time to plan what is going to work best for the community," she said.
The ACT government examined the development of the area 20 years ago but it was considered to be too expensive. But Ms Lee said she believed the costs could be offset.
"The modelling we have done in terms of Kowen with an additional 100,000 dwellings that it will be offset by a combination of land sales, as well as the ongoing revenue that will be brought in by rates, levies and land tax," she said.
ACT Greens deputy leader Rebecca Vassarotti lashed the Liberals' plan, saying it lacked any sort of creative thinking.
"They have put very little thought into how we can use smart, modern design standards to give Canberrans what they need without simply bulldozing around the edges," she said.
"After years of being out of government, it looks like the Canberra Liberals have resorted to playing SimCity with our urban planning in an effort to make themselves look like a real alternative."
The Canberra Liberals' commitment for 125,000 new dwellings in the ACT by 2050 also includes a plan to allow separately titled dwellings on RZ1 blocks larger than 800 square metres.
The party has also promised to start a housing development in Symonston and to work with the federal government to develop the former CSIRO Ginninderra land.
Property Council ACT executive director Ashlee Berry said the Liberals' plan for separate titling of dual occupancies was positive but caution was needed on the development of Kowen Forest.
"Bulldozing Kowen Forest could raise concerns for many in the community. It's crucial that any decision about the site involves a full exploration of its long-term impacts," she said.
"Community consultation and a comprehensive feasibility study would be essential to balance housing needs with environmental and recreational values."
But the Housing Industry Association welcomed the commitment to develop Kowen, with executive director of ACT and southern NSW Greg Weller saying there needed to be a future pipeline for residential land in the territory.
"Kowen Forest is a good solution and identifying a long-term pipeline of land is something that we have been calling for in our pre-election housing priorities, to take the pressure off Canberrans who currently feel like every land sale will be the last," he said.
"The ACT has to accept the current approach to planning is pushing families into surrounding developments in NSW, putting more cars on the road for longer, potentially negating some of the environmental benefits they are seeking to achieve. The ACT also misses out on revenue through land tax, rates and registrations."
