Boris Johnson wants London to retain stamp duty
London should be allowed to retain stamp duty on all property sales in the city to build the new homes it "desperately needs", the mayor said.
Boris Johnson is calling on the government to let the city keep the estimated £1.3bn a year.
Currently, stamp duty on property sales goes to central government.
The Treasury said Mr Johnson's proposals would distort the housing market around London and it did not plan to take them forward.
Under the mayor's proposals, the money would go to City Hall and he would then redistribute it in line with powers he was given under the Localism Act.
He said the funds would help build a million homes by the mid-2030s, and create thousands of jobs.
Mr Johnson said he wanted the government to give London boroughs more freedom to build homes, including removing the borrowing limits on councils so they can invest in housing.
He also wants a new affordable housing settlement from 2015, with rents reflecting incomes, and the transfer of surplus government land to City Hall.
Mr Johnson said: "Since I was elected London's population has grown by 600,000 and is forecast to rise by a further million at least over the next 25 years.
"If we do not come up with a new plan to build the homes we need, this great city will suffer and the whole country will feel the consequences."
Len Duvall, Labour group leader on the London Assembly, said: "Boris could be doing a lot more with the money and powers he already has.
"If he did get this extra money he would need to seriously up his game as his record so far is woeful.
"On his watch affordable house building in London has collapsed and he is trying to stop local councils from building these desperately needed affordable homes."
But Jonathan Glanz, Westminster City Council's portfolio holder for housing, said: "The mayor's proposals have the potential to halt the polarisation of central London as a place where only the wealthy and needy can find homes.
"It makes absolute sense for London to retain the stamp duty on sales, particularly in boroughs like ours and Kensington and Chelsea where the preponderance of high value properties triggers the higher rates of stamp duty.
"Westminster Council has been lobbying on the need to release the borrowing cap on the Housing Revenue Account to allow us to build a range of homes.
"The fact is we have a housing crisis and we urgently need to increase our housing stock of all kinds."
David Orr, chief executive of the National Housing Federation, said the mayor was "spot on".
"Costs of renting and buying a home are way beyond the means of the average Londoner," he said.
"High housing costs are also a threat to business growth as sky-high rents mean that workers are increasingly struggling to live here.
"The answer is to address the chronic undersupply of homes."
A Treasury spokesman said: "It's an interesting idea but not something we plan to take forward at the moment.
"This is primarily due to the distorted effect it would have on the housing market directly around London.
"It would also have an effect on the tax revenue coming into the treasury."
Meanwhile, the Housing and Regeneration Committee has begun an investigation into how the city's boroughs can meet the housing needs of people on low incomes.