London boroughs are to join forces to provide extra properties for families threatened with homelessness.
It is hoped more than 35,000 London households will be helped by the £38m Capital Letters government programme over the next three years.
Communities Secretary James Brokenshire said the "radical" plan could make a "real difference" to vulnerable people in the capital.
But housing charity Shelter said more social homes had to be built.
A total of 3,103 rough sleepers were found in the capital between July and September 2018, the highest figure since records began.
Funding for the new scheme will be taken from the £1.2bn committed by the government to address rough sleeping.
A total of 11 London boroughs have signed up - including Tower Hamlets, Croydon and Ealing.
The boroughs will work together to provide homes for families struggling to find secure housing, ending the current competition between areas for the best accommodation.
Instead, local authorities will be encouraged to join forces in boosting accommodation to tackle homelessness across the whole city.
The announcement comes less than a fortnight after a homeless man died after collapsing outside the Houses of Parliament.
Darren Rodwell, London Councils' executive member for housing and planning, said: "With so many homeless households and so little accommodation available, London faces the country's most serious homelessness challenge.
"Through collaboration, boroughs will collectively strengthen our market position and secure much better housing options for homeless Londoners."
Greg Beales, campaign director at Shelter, said: "While we welcome efforts to help the many families who are on the verge of homelessness now, the government must also address the deep problems in the system that are leading to this housing emergency.
"Too many families are stranded in unstable private renting, battling to keep a roof over their heads against a tide of rising rents and benefit cuts."