Stand-alone state houses in Māngere will be bowled to make way for thousands of new builds, a mixture of state housing, private sales and Kiwibuilds.
Over the next 10 to 15 years, 2700 state houses in Māngere will be bowled and replaced with 10,000 new "warm, dry homes," Housing and Transport Minister Phil Twyford announced.
They will be built near the planned light rail line that will go from central Auckland to the airport.
He said up to 3500 Kiwibuilds will be built, along with 3000 state homes and 3500 homes to be sold on the market.
Mr Twyford said the project was one of the first things he signed off after taking office.
"It's not our policy to run a gentrification programme that will see families pushed out," he said.
"The property market does that extremely efficiently itself."
Mr Twyford said he intends to give families already living in the area priority access to the Kiwibuild homes.
The first state homes will be built within months, with 35 homes being demolished and replaced with 66 state houses and 100 other homes - half of which will be Kiwibuilds "and affordable".