NSSF plans to put up the project on a 1,000 acre land in the Municipality.
During its sitting today under the chairmanship of President Uhuru Kenyatta, the Cabinet okayed the plan by NSSF to work with the private sector in implementing the project.
In the deal, a strategic partner will be identified to construct the houses and build other amenities.
The plan is part of the government's move to deliver its pledges on reducing the acute shortage of houses in the capital in line with the Jubilee manifesto.
The Cabinet further agreed to form a sub-committee to explore the creation of an industrial park on a PPP model to produce building materials that will cater for low-income earners.
And in a bid to improve collections from members of NSSF, the Cabinet authorized Kenya Revenue Authority to collect them on behalf of the giant parastatal.
The move according to the Cabinet will boost revenue collections from the current Ksh 600M to Ksh 12B.
The cabinet went further to issue a directive to other parastatals to use KRA to collect their levies.
On the issue of the recently introduced free maternal services, the Cabinet expressed its satisfaction with gains made on the program that started on the 1st June 2013
The Cabinet noted that since its inception, the number of expectant mothers using public facilities had more than doubled countrywide.
And to make the program more successful, the Cabinet approved the recruitment of 40 health workers per constituency, 30 of whom will be nurses.
By Daniel Korir