The Minister for Housing is bringing proposals to Cabinet next week to establish the Land Development Agency, which will be funded to the tune of €1.25 billion.

The move was confirmed at a Fine Gael think-in where the housing crisis was discussed by the party's TDs and Senators for several hours.

Taoiseach Leo Varadkar said it marks a significant change in the Government's involvement in the housing market.

Mr Varadkar said it would mean that the State would build social, affordable and private homes.

He said the move would be viewed in the future as being on a par with the establishment of the ESB and the IDA.

Meanwhile, Minister Eoghan Murphy has set a deadline of close of business tomorrow for a number of local authorities to explain why they have not done enough to prevent homelessness figures rising.

Mr Murphy said it was unacceptable that two or three local authorities were not putting in place the solutions, when he had given them the policies, the resources and the money.

The minister said he would have to intervene directly if this continues to happen.

Earlier, Mr Varadkar said he could understand why people were sceptical about the party's ability to solve the crisis.

Latest figures from the Department of Housing show that 9,891 people were living in hotels, bed and breakfasts and family hubs in July.

The Taoiseach said that the issue of the number of people accessing emergency accommodation was something that was being worked on.

He said: "I don't think the rise in the number of people in emergency accommodation can be described as progress.

"It's evident to everyone that we are still going in the wrong direction when it comes to emergency accommodation and we are in no means in denial about that.

"It is something that we are working on."

Mr Varadkar said there was "no quick fix" to the housing crisis, and the "vast majority of people understand this is a crisis that has been emerging for a very long time".

When asked if Fine Gael cared enough about homeless people to solve the crisis, Mr Varadkar said he "totally rejects" that assertion.