Up to 3000 new houses will be built at Hobsonville Point and 600 of them will be sold for $485,000 or less, the government says.
Housing Minister Phil Heatley says the project will bring more affordable homes onto the Auckland market and could be replicated elsewhere.
The Hobsonville Land Company, a subsidiary of Housing NZ, will develop the land previously owned by the Defence Force.
Mr Heatley says 2500 to 3000 new homes will be built, 10 per cent will be sold for less than $400,000 and a further 10 per cent will be priced between $400,000 and $485,000.
"It's generally understood that these price ranges are considered more affordable in the Auckland context," he said on Friday.
"Details about a home ownership access scheme will be announced."
Labour's housing spokeswoman, Annette King, says the project is lame and half-hearted.
"Phil Heatley's announcement of just 600 new affordable homes in one part of Auckland is underwhelming to say the least," she said.
"It's just a fraction of what's needed."
Labour leader David Shearer is expected to announce a new housing policy at his party's annual conference in Auckland on Sunday.