Economic growth should be kick-started by building 100,000 homes using £2.5bn from the auction of the 4G mobile phone spectrum, Labour will propose today.
Ed Balls, the shadow Treasurer, will say the Government must stop dithering and use much of the £4bn 4G windfall to stimulate growth rather than reducing the deficit.
His approach marks a shift from a year ago, when he said any Treasury windfalls should be used to cut the national debt. In 2000, the then Chancellor Gordon Brown devoted the £22.5bn receipts from the 3G auction to reducing the debt. George Osborne has not disclosed how the 4G money, which will come from telecoms companies bidding for rights to sell access to superfast mobile internet, will be used.
Mr Balls will tell the Labour conference in Manchester: "In difficult times, we urgently need to put something back into the economy. So with this one-off windfall from the sale of the 4G spectrum, let's cut through the dither and rhetoric and actually do something. Not more talk, but action right now."
The shadow Chancellor will argue that building 100,000 affordable homes to rent or buy would create more than 150,000 jobs in the construction industry and up to 600,000 jobs in the supply chain. He will also propose a two-year stamp duty holiday for all first-time buyers of properties up to £250,000, at a cost of £500m.
Mr Balls will argue: "If more people are on the dole, not paying taxes, you can't get the deficit down. If businesses are going bust, not hiring new workers, you can't get the deficit down. If the economy's not growing, you can't get the deficit down. And that is why we must act now to kick-start the recovery, tackle the causes of rising borrowing and start to make our economy stronger for the future."
Admitting that an incoming Labour government would face tough choices, he will refuse to promise to reverse any of the Coalition's spending cuts or tax rises.
He will tell Labour delegates: "Unlike Nick Clegg, we will not make promises we cannot keep. And because we all know there can be no post-election spending spree, in our first year in government we will hold a zero-based spending review that will look at every pound spent by government."
Yesterday the Labour leader Ed Miliband outlined plans for legislation to enforce the break-up of Britain's biggest banks unless they separate their investment and High Street operations. It fears the Coalition Government is watering down the "hard ring-fence" proposal from the Vickers inquiry into the banks.
Labour's approach has provoked some behind-the-scenes tensions between Mr Miliband and Mr Balls in the past three months.
The Labour leader had wanted to announce the party's support for legislation to enforce a break-up of banks when the Libor interest-rate fixing scandal erupted but Mr Balls urged caution. One insider said: "There was no great row but Ed Balls wanted to make sure our policy was properly road-tested."
On the opening day of the Labour conference, Mr Balls came under fire from the trade unions, who are furious about his support for continuing restraint on public sector pay.
Paul Kenny, the general secretary of the GMB union, said: "Ed Balls, he would give an aspirin a headache, wouldn't he? Being truthful about it, he comes here and he's not really in touch with the argument. He really needs to get closer to what's happening on the ground."
Mr Kenny warned that Labour was "losing ground with core supporters by continuing to ignore the fact that millions of people are suffering". He added: "Labour has to give them hope, and telling them there's nothing down for them isn't hope."
But Lord Prescott, Labour's former deputy leader, told the unions to "grow up" after Len McCluskey, the general secretary of Unite, pledged to "kick the New Labour cuckoos out of our nest" and win back the party for the union movement.
Lord Prescott told Sky News: "I can't understand people saying 'the Blair era was bad'. He fought and won three elections. Tell me another Labour leader who did that. Tell me another one who gave us minimum wage. Tell me another one that got as many people back to work."
Ed vs Ed: Labour's backstage tensions
Labour's prospects could be undermined if the relationship between Ed Miliband and his shadow Chancellor were to hit problems. They both work hard to avoid a repeat of the destabilising rivalry between Gordon Brown and Tony Blair, but they do not always succeed:
Did not appoint Ed Balls as shadow Chancellor when he became Labour leader two years ago, only doing so three months later when Alan Johnson resigned.
Keen to show voters he has the steel to be prime minister and is in charge of his party. Sometimes frustrated by Ed Balls keeping his cards close to his chest.
Accused of working to rule when he was appointed shadow Home Secretary two years ago and of building up a rival powerbase with his wife Yvette Cooper.
Keen to keep an iron grip on all new policies and spending cuts. Critics claim he calls the shots at shadow Cabinet meetings and keeps colleagues in the dark about his own announcements.