Lord mayors from across the country want to strike a deal to have debts to the commonwealth waived so the money can be funnelled into new social housing.
The deal would be similar to that struck with Tasmania recently.
The Council of Capital City Lord Mayors, which includes ACT Chief Minister Andrew Barr, descended on the federal parliament on Wednesday urging the government to make social and affordable housing in inner cities a key infrastructure priority.
"Australia is facing a homelessness and housing crisis," Sydney Lord Mayor Clover Moore told reporters in Canberra.
"Not a single person on Newstart or youth allowance can afford to live in any of our capital cities."
She said the council wants to see the commonwealth commit to a specific project in each city that will contribute to reducing the numbers of people who are living rough on the streets because they can't afford to get into social housing.
Mr Barr wants to see the commonwealth strike the same deal it concluded with Tasmania earlier this month where it waived $150 million in housing debt owed by the state so it could use that money for housing.
"We need to increase the supply of affordable housing in this nation and one very practical way to do that is for the commonwealth to strike the same deal they have with Tasmania with each Australian state," he said.
In the ACT's case, it owes $120 million and half the housing funding it gets from the commonwealth each year is used to manage the debt.
Mr Barr will have the opportunity to discuss this further with Treasurer Josh Frydenberg when state and territory treasurers gather in Canberra next month.
Federal Finance Minister Mathias Cormann said when the Tasmania deal was struck that he was prepared to listen to other states.
Housing Minister Michael Sukkar told parliament on Wednesday the government was committed to community housing through a new National Housing Finance and Investment Corporation.
"(The corporation) is funnelling hundreds of millions of dollars into community housing providers to support more community and social housing throughout our country, and in its first year delivered 560 new homes," he said.
The minister also pointed to government-backed schemes to help first-home buyers.
Australian Associated Press