Plans to make it a criminal offence for council tenants to sub-let their homes are to be unveiled by the government.
An estimated 160,000 tenants sub-let their homes, which is not currently an offence.
Ministers call it a "scandal", and the BBC's Robin Brant says they have "long talked of tougher rules". Labour said more affordable homes had to be built.
Housing Minister Grant Shapps said: "For too long this country has turned a blind eye on the multi-billion pound problem of housing tenancy fraud and abuse.
"This year the coalition is determined to end that scandal. Why should someone on a six-figure income enjoy a fantastically subsidised council rent, whilst those in real need languish on the waiting list?
"And why is it so easy to get away with sub-letting your council house at market rent and simply pocketing up to £1,000 a week at taxpayers' expense?"
He told the BBC a new criminal offence was needed because "if the sanctions themselves are so weak, the worst that happens is you get that council home taken away from you if you're found out... we need to change that."
Waiting lists Mr Shapps said he believed the money raised from a clampdown could be worth tens of millions, of which "every penny" would be spent on building houses "for people who are actually in need of that housing".
The coalition is due to launch new consultations ahead of legislation, with any savings pledged to go towards building new social housing.
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