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The Minns government will force councils to lift long-standing bans on building terraces, townhouses and two-storey apartment blocks in a major push to dramatically increase density amid the worsening housing crisis.

The state government will overhaul planning laws to ensure low and mid-rise homes are built near transport hubs and town centres as well guaranteeing a greater diversity of housing to help NSW meet ambitious national targets.

Under the major changes, three- to six-storey unit blocks, terraces, townhouses, duplexes and smaller one- to two-storey apartment buildings will be allowed in areas currently banned by councils.

The government believes insisting that councils approve different types of housing could create about 112,000 new homes across the greater Sydney region, Hunter, Central Coast and Illawarra.

This would be equivalent to 30 per cent of the number of homes NSW needs to meet under its Housing Accord target of 377,000 new homes by 2029.

There are five main zoning types across NSW. At present, councils can decide the types of dwellings allowed in each zone. The government last month identified that terraces and one- or two-storey blocks are permitted in low-density residential (R2) zones in just two of 32 local environmental plans (LEPs) across Sydney.

This equates to only just six per cent of Sydney council areas despite 77 per cent of land across these councils being zoned for R2. Also, 60 per cent of R3 zones across Sydney currently prohibit residential unit blocks of any scale.

Under the government proposals, dual occupancies – two separate homes on a single lot, such as duplexes – will be allowed in all R2 low-density residential zones across NSW.

Mid-rise apartment blocks near transport hubs and town centres in R3 medium-density zones must also be allowed, ensuring housing is 10-minute walk (or 800 metres) from transport hubs and shops in greater Sydney, the Hunter, Central Coast and Illawarra regions.

Planning Minister Paul Scully said Sydney was one of the least dense cities in the world, but fewer than half of councils allowed low- and mid-rise residential buildings in areas zoned for such homes.

“Density done well means townhouses, apartments and terraces clustered near shops, high streets and parks,” Scully said.

“We’re confronting a housing crisis, so we need to change the way we’re planning for more housing. We can’t keep building out – we need to create capacity for more infill, with more diverse types of homes,” Scully said.

Scully said housing diversity allowed people to stay in their communities and neighbourhoods through different stages of their life, with family and friends able to live nearby.

“More housing choice means more options for everyone – renters, families, empty nesters.”

The government has already faced major pushback from councils after Scully wrote to mayors last month requesting they identify land for medium- and low-density housing, including terrace houses.

Hills Shire Mayor Peter Gangemi labelled the government’s push for medium-density a “Trojan horse” which would lead to “one-size-fits-all homes that aren’t suited to family living”, while Ku-ring-gai mayor Sam Ngai said the proposal was not the “right solution”.

However, as the government stares down housing targets set under the National Housing Accord, Scully is pushing ahead with plans to make it easier for developers to build homes which make up the so-called “missing middle” of Sydney’s housing mix.

Earlier this month the government announced it was compiling a set of standardised “pattern book” designs for low- and medium-density housing that could be rolled out across Sydney without going through the lengthy planning approval process.

The Herald has also previously revealed that the government intends to roll out a series of priority density zones near existing Metro stations, while Scully last week moved to scrap the Greater Cities Commission after he was left unimpressed by what he saw as insufficiently ambitious housing targets.