The Government's latest policies to address the housing crisis are being warmly welcomed by Auckland's mayoral candidates as well as Local Government New Zealand.

John Key has announced a $1 billion fund for infrastructure projects in high-growth cities, and is looking into the establishment of urban development agencies.

MORE: PM reveals $1 billion plan to ease housing crisis Labour responds

Auckland's mayoral candidates have given the announcement their tick of approval.

Phil Goff is ditching the Labour Party song sheet, describing the deal as an important first step towards better relations between the Government and Auckland Council.

Mark Thomas said the deal is positive, but Auckland Council wouldn't need the bailout if Len Brown had dealt with the rules that are holding up the consenting process.

Vic Crone said the fund will leave the council in a clear position to speed up consents and infrastructure builds.

The government says the fund will be open to councils in Tauranga, Christchurch, Hamilton and Queenstown, as well as Auckland - giving them quick-cash to build road and water infrastructure to support housing builds.

The head of Local Government New Zealand is also welcoming the news.

President of Local Government New Zealand Lawrence Yule said it will pave the way for the necessary road, water, and housing infrastructure needed to meet unprecedented growth.

"For high-growth councils, who are near their debt ceiling, their ability to plan massive infrastructure ahead of time is constrained by money issues and if the government is stepping in and offering $1 billion in interest-free loans that is effectively a very good outcome," he said.

"The government's saying 'well, actually these things need to be advanced quicker than the council may have put them in. So, we will lend you the money, you can put that stuff in earlier but, once the development does come on board, then we expect the developers, through development levies usually, to pay that money back.'"

However, the desperately needed money will still come with conditions from the government.

Housing Minister Nick Smith said that during the application the government would want to talk to councils about things like speeding up the consents process.

"The councils do need to show that this investment of $1 billion is going to deliver more housing and its going to enable us to be able to have a pretty free and frank conversation with them."

Land bankers are also on notice, that they may be forced to develop, or sell up.

In addition to the $1 billion injection into infrastructure projects, the government is also considering what other powers they’ll bring in, in the form of Urban Development Authorities.

The Housing Minister said they haven’t ruled out using the Public Works Act, as they did in Christchurch after the quakes.

"It's about identifying a distinct area and then being able to have powers to be able to deal with not just the planning issues, but the reserves issues, the roads issues, the infrastructure issues."