Pre-built modular homes will be trialled in the Hunter in a bid to boost the state's social housing stocks.
It comes amid calls for a new housing tsar and better rights for renters, with research showing construction targets will not be met.
Sites in Wollongong, Newcastle and Lake Macquarie have been selected to test modular social homes under a NSW government trial hoped to speed up delivery.
Five dwellings will be built on four Hunter sites in Belmont South, Windale, Kotara and Toronto.
The extra dwelling will be created via a dual-occupancy development.
But the government is still working through regulatory barriers for modular housing, which has not been rolled out at scale in the state before.
Housing affordability and availability is putting pressure on people in NSW and the state needs to use "non-traditional methods" to deliver more homes sooner, Premier Chris Minns said.
"We are pulling every lever we can to tackle the housing crisis," he said.
Housing and Homelessness Minister Rose Jackson said the trial was a step towards revolutionising public housing delivery.
"Leveraging modern construction methods will help us provide sustainable, quality housing faster for the people that need it most," she said.
The government is working with the state's building commission on standards for offsite manufacturing of homes.
Research from Oxford Economics Australia on Monday predicted that more than one in five of the 1.2 million dwellings the nation was trying to build in the next five years would not be completed.
Meanwhile, business groups, universities and unions that are part of the Housing Now! alliance are calling for the appointment of a coordinator-general to drive delivery of homes in NSW.
The role would direct government agencies to resolve planning challenges, reassess major, unapproved housing projects in a bid to resolve issues and guide government on infrastructure investment.
"A dedicated housing coordinator would cut through swathes of red tape, compel government agencies to address issues and inform cabinet on how to progress major housing projects stuck in the planning system," Housing Now! chair David Borger said.
The recommendation is one of 10 that the alliance has made in its 2024 policy platform, launched on Monday.
Other policies include rezoning to allow housing to be constructed at places of worship, alternative planning pathways for university accommodation, and better security for renters with an end to no-grounds evictions.
Mr Borger is set to appear before a parliamentary inquiry being held into a proposal to develop Rosehill Racecourse in Sydney's west into a mini-city of up to 25,000 homes.
The inquiry, chaired by opposition housing spokesman Scott Farlow, is examining the development proposal's process and what role the government played, as well as associated impacts on transport infrastructure and the horse-racing industry.
Trainer Gai Waterhouse, who has voiced her opposition to the proposal, was among the first to appear before the committee inquiry.
