The factory will produce more than 5000 steel-framed modules a year. These can be stacked to make buildings of up to 12 storeys.
It is understood that the first customer for the factory will be the 10,000-unit Barking Reach development in east London.
Live-In Quarters is developing the plant in partnership with the East Thames Housing Group, a social housing provider, and Bellway Homes.
John Blyde, Live-In Quarters' managing director, said that the concept could be put into practice in the near future.
He said: "With some extremely powerful allies, we will be building a housing factory in east London."
Blyde said that a site had yet to be found for the factory, although it is understood that it will be located in Barking or Dagenham.
He said: "We must, and will, have a wide-ranging order book. The units could be used for housing, hotels and accommodation for students and asylum seekers."
The steel-framed units will be 12 m long and 3.6 m wide, and are designed to provide a quick and easy way to build housing developments.
Blyde said the factory could also produce timber-framed units for low-rise accommodation.
Jeremy Grint, head of regeneration at Barking and Dagenham council, welcomed the factory as a means to aid development in the area.
He said: "Given that there are proposals for 20,000 homes in Barking and Dagenham alone; there is considerable potential for this."
East Thames Housing Group and Bellway Homes were unavailable for comment.
A council spokesperson said that businesses could make products from recycled materials, such as rubber flooring or motor tyres.
The council is hoping that an environmental technology resource centre for London would be built at the site.
The spokesperson said: "The idea is to get the technical centre up and running, and the site could then act as a catalyst for further development." European funding for the centre will be decided later this year.