Fliss Butcher and JB Munro would like to see social housing built using public-private partnerships.
Cr Butcher wants the coalition to explore options to build units with funding from local and central government.
Mr Munro, chairman of Abbeyfield New Zealand, said it was a positive step that could bring to fruition initiatives such as his stalled plans for a 10-unit community house in South Dunedin.
The council's Social Housing Strategy will see it taking a larger role in the city - stepping up from the provision of housing for older people to also playing a lead role in the grouping of social housing providers.
Cr Butcher, who was chairwoman of the social housing working party that developed the strategy, said the grouping was needed to co-ordinate the provision of social housing.
"We need to work out where the gaps are and work on that together," Cr Butcher said. "There are definitely some huge gaps," she said.
Organisations taking part in the first social housing group meeting, scheduled for this month, are the council, Housing New Zealand Corporation, Abbeyfield New Zealand, Araiteuru Marae Council, Dunedin Night Shelter Trust, Just Housing, Pact, Presbyterian Support Otago and Te Whare Pounamu Dunedin Women's Refuge.
"The next step is to have a discussion about whether there is room for public-private partnerships," Cr Butcher said.
She would like to see local and central government buying land and helping develop housing, which would be operated by the social housing agencies.
Dunedin-based Mr Munro said the concept was "great" and he had been "a fan of it for a long time".
"Organisations struggle to get capital monies for these ventures but they have the heart and the willingness to respond to community needs," Mr Munro said.
Abbeyfield NZ houses have been described as flatting for seniors - providing communal living for independent older people.
The organisation had an eight-unit house in Balmacewen and wanted to build a larger house in Cutten St, South Dunedin.
There was demand for the housing but to date the plan had foundered for lack of funding.
"We had held the land through an arrangement with the city council but we couldn't build so the lease went back to the DCC."
He understood IHC was also interested in building housing on the property.
Housing NZ administered a Housing Innovation Fund to enable partnerships with the private sector and Abbeyfield had used that to build five of its 12 houses in New Zealand.
But attempts to do the same in Dunedin had not been successful, Mr Munro said.
Housing NZ communications manager Nick Maling said the corporation was "definitely open to exploring partnerships for the provision of social housing".
It was now working with two private building firms in Dunedin to build 10 two-bedroom units which Housing NZ would then lease, Wellington-based Mr Maling said.
