The funding will be distributed through the National Housing and Investment Finance Corporation.
The move follows a government decision—while under pressure from the Greens—earlier in the year to provide $2 billion to the social housing accelerator fund.
Greens leader Adam Bandt welcomed the decision by the federal government, saying that "pressure works."
“Labor’s HAFF still won’t fix the housing crisis, but the Greens have secured $3 billion dollars for housing right now—not relying on a gamble on the stock market—and we’ve got to a position where it can pass the Senate," he said.
"Labor said there was no more money for housing this year, and we pushed them to find $3 billion."
Under the proposed legislation, the fund will stay in perpetuity, and each year, the government will use its returns to invest in housing across Australia. However, the return amount that can be withdrawn from the fund is capped at $500 million annually.
The negotiations mean that the federal government has spent six times more than it was willing to spend on an annual basis.
Greens Say They Are Just Getting StartedHowever, the Greens have warned the Labor Party that they have only just begun wielding their influence, signalling that they will use all significant legislation to campaign for the government to freeze rents around Australia.
“Renters are powerful, and the Greens are the party of renters. We have won more money for housing for renters, and rent control is next,” Mr. Bandt said.
“I say this to Labor: if you continue to ignore renters, your political pain has just begun. There are several more significant bills on the immediate horizon where the Greens will use our position in the balance of power to push the government to address soaring rents with a freeze and cap on rents.
“Renters are on the march, and the Greens will be fighting alongside them all the way.”
Meanwhile, the Greens housing and homelessness spokesperson Max Chandler-Mather MP said that the Greens' advocacy had meant that for the first time, Australian "renters have a national voice for the first time because the Greens stood up and fought."
"Our message to renters is your voice and vote is powerful, and the Greens are ready to fight for you and know that we won’t stop until every renter in this country has a safe and affordable place to call home."
Mr. Chandler-Mather argued that it appeared that the Albanese government did not care about the one-third of this country who rents and that housing advocates had caved too soon to the Labor party.
"Labor had the opportunity to freeze and cap rent increases through National Cabinet, and they refused, so from now on, every rent increase is Labor’s fault, and come next election Labor should be prepared to hear from renters loud and clear they are fed up with being treated as second class citizens," he said
“To every housing organisation and crossbench MP who told us to pass the HAFF Bill in its original form, sit up and pay attention. When we stay at the negotiating table, we get outcomes, and $3 billion of additional guaranteed and immediate money is proof that Greens in the balance of power can drag Labor kicking and screaming to taking meaningful action."