Housing chiefs in mid Wales are suggesting a "radical overhaul" of the system for allocating homes.
Mid Wales Housing Association said there was a "housing crisis" with most households in Ceredigion - and 40% in Powys - unable to afford a mortgage.
It said housing priority should be given to the employed who "contribute" to society, and not to people with "problems".
The assembly government said increasing affordable homes was a priority.
The housing association said it wanted to abandon the existing way of allocating housing based on a system which gave people with the greatest number of problems the most points, and a house.
Instead, it wants a banding system which gives priority to local people, those in employment and those who contribute in a positive way to their community through volunteering.
The association, which has 1,250 homes across mid Wales, described the housing situation as "shocking".
It said nearly 40% of households in Powys could not afford to buy a home or rent from private landlords.
In Ceredigion, three-quarters of all households in the most affordable housing market did not have the income to secure an entry level mortgage, the association added.
It claimed that a huge sector of the population in both counties were reliant on affordable housing from councils or housing associations, even though between 1996 and 2008 council and housing association homes in Wales decreased by 12%.
There is also an expected shortfall in provision in mid Wales of 345 properties a year.
The association's chief executive Shane Perkins said: "In these difficult economic times to ask for more resources from the assembly is naive and we need to find innovative ways to respond to the crisis.
"Everyone who applies to us needs a home, and we waste a lot of time trying to decide who is worst off.
"We are suggesting that once we establish the applicant has a housing need, thereafter the property is allocated to local people, who are in employment and/or are contributing to their communities through volunteering."
The association has issued a consultation paper on the changes.
A Welsh Assembly Government spokeswoman said increasing the number of affordable homes in Wales was a priority.
She said statistics published last month showed that "we have already exceeded our four-year target by delivering 6,707 new affordable homes, one year ahead of schedule.
"However, we know that demand is still high and we are working with the sector to deliver even more homes in Wales through innovative solutions such as the Welsh Housing Investment Trust.
"We also recognise that rural housing is a particular issue and we therefore support a network of 10 rural housing enablers across Wales."