Tasmanian Premier Jeremy Rockliff, who governs in minority, said legislation to set up a modular housing finance guarantee would be brought before parliament in August.
"Tasmania does not have a housing demand problem. We have a housing supply problem," he told a CEDA business lunch on Wednesday.
"Embracing faster, lower‑cost construction methods is not optional.
"It is essential to boosting housing supply, easing pressure on costs and ensuring more Tasmanians can access secure and affordable housing."
The scheme will guarantee construction loans while homes are being built off-site, where limited collateral has historically restricted lending, Mr Rockliff said.
The guarantee will reduce as construction progresses and cease once homes are installed and become a standard mortgage security.
The initiative, which Mr Rockliff says will be discussed with industry and lenders in coming months, aims to boost housing supply.
It comes after the federal government in May announced $40 million would be spent on trialling a new open-source prefabricated housing system across Australia.
The 2026 National Housing Supply and Affordability Council report found for decades Australia's housing system has not kept up with demand.
Build times have increased by 40 per cent since the COVID-19 pandemic and construction costs have surged 88 per cent since 2014/15, a recent CEDA report found.
Mr Rockliff's announcement comes one day after a KPMG review criticised the state government for a lack of clarity around its progress to deliver a pledged 10,000 homes by 2032.
There was a lack of an agreed and widely accepted definition of what counts as a home, the report found.
An April update of the performance of Homes Tasmania, which is being disbanded, said the government had completed 4854 homes.
More than 2200 were social housing or supported accommodation. Included in the total figure were 149 lots of land and 1244 homes purchased with the government's shared equity scheme.
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