They hope the prefabricated housing push will speed up delivery and lead to major savings through economies of scale.
A white paper is due out next month designed to galvanise the sector, according to a report in the Sunday Telegraph.
More than 100,000 pre-packed modular homes could be created as the government looks at ways to meet its one million homes target by 2020.
Housing and planning minister Gavin Barwell said: “Offsite construction could provide a huge opportunity to increase housing supply and we want to see more innovation like this emulated across the housebuilding sector.
“The £3 billion Home Building Fund will help build more than 225,000 new homes and provide loans for small firms, custom builders, offsite construction and essential infrastructure, creating thousands of new jobs in the process.”
Several major players like Laing O’Rourke and Legal and General are targeting the sector, which has struggled to take off and reach its full potential in the UK.