The government should seek to create new cities and help expand existing ones by relaxing planning laws as part of next week's Autumn Statement, a centre-right think tank said on Wednesday.
In a move away from housing reforms announced by David Cameron on Monday, a report by Policy Exchange, a think tank often linked to the prime minister, said plans to help first-time buyers onto the property ladder would not help repopulate Britain's cities.
Instead, the report said Britain should focus on building new homes on derelict sites or green areas on the edges of cities to boost growth.
The idea should be to create garden cities, providing growth through construction and boosting the country's economic prospects as rapid urbanisation in Asia intensifies competition in the global marketplace, the report said.
Garden cities are private sector developments built near existing towns and cities with greater planning input from local communities, the report noted.
Building new garden cities sounds radical. But we have successful examples in the UK, from the original garden cities to new towns like Milton Keynes and major planned developments like Docklands and the Olympic site, said Alex Morton, author of the report.
The report said building larger cities would lead to greater growth and productivity than in smaller towns because of increased competition, faster transfer of ideas and larger economies of scale.
But Morton said UK cities were stagnant.
Almost one million people migrated away from urban areas between 2001 and 2008, he said, citing data from the Office for National Statistics.
Between 1951-2009 the share of people living in metropolitan areas declined by 22.5 percent in the UK, he added. In the same period in the United States, the share of people living in large cities (over one million people) rose sharply from 30 percent to 55 percent.
China alone will have 225 cities with over a million people by 2025, Morton said.
Policy Exchange is an independent, non-partisan educational charity, which works with academics and policy makers from across the political spectrum.