In response to the Callcutt review on house building, the department said it would introduce a legal definition on what constitutes a "substantial start" by a developer to avoid major sites being held up by long delays.
Housing and planning minister Yvette Cooper said: "We need to build more affordable, greener homes. But we cannot afford to wait for developers who may drag their feet once planning permission has been granted and hope to benefit from increases in land value."
The government will consult on options for tougher rules on when a development officially begins. Currently, developers need to start a scheme in three years for planning permission to be valid. But Cooper observed that such a start may involve just digging a ditch.
The move is in line with guidance from review leader John Callcutt, who said obliging developers to make a substantial start would make land banking more expensive, forcing them to start production or sell. "This prevents an abuse of planning permissions and is an incentive to bring land into production," he added.
The DCLG also aims to agree an industry standard to ensure that developers' land holdings are set out clearly in financial statements. A DCLG spokesman would not confirm whether a formal consultation will form part of the forthcoming planning reform bill.
