Housing minister Grant Shapps has unveiled his plans to allow rural housing schemes of up to 20 homes to by-pass planning laws.
The Right to Build initiative aims to provide small numbers of affordable homes in rural areas where high home prices are driving people away.
It is part of David Cameron's "big society" idea of allowing more decisions to be made locally.
Shapps said: "Far from the Nimbyism that often hits the headlines, up and down the country there are entire communities willing and eager to give the go-ahead for new developments in their area
"The countryside must be a vibrant place to live, and cannot be allowed to become a museum," he said
"I want to give communities the power to preserve their villages, which are currently struggling to survive because of a shortage of affordable homes."
To stop the new system being abused, communities cannot increase a village's size by more than 10% over 10 years.
Shapps said a successful planning ballot would have to show 80-90% majority in favour.
Local people will be able to group together to buy land through a community land trust, with support from banks.
Any surplus made from the sale or renting of homes will be allowed to be recycled for the community's benefit.
As well as family homes, community group's can choose to build sheltered housing for the elderly, or set aside plots for people to build their own homes.
They could even offer long-term low rent deals for local shops, community halls or sports facilities.
The Campaign to Protect Rural England has criticised the proposals, which could see building in the green belt.
The campaign group said there should be proper planning scrutiny of house building by democratically-elected councillors rather than a simple public ballot.
Head of planning Fiona Howie said: "We are pleased that the government is considering how to protect and enhance rural village life and delivering affordable housing in rural areas will be a critical part of this.
"The level and location of development should be informed by a proper assessment of local housing need and an understanding of whether the local environment can accommodate more development."
