Housing Minister Eoghan Murphy has said people should be "excited" about a future of co-living where they will have "less space for less rent".
Mr Murphy told the National Housing Conference at Dublin Castle the plans, which have been criticised, should be welcomed.
"As we all did when we were younger, we sacrificed less space for less rent," he said.
"This isn't about allowing for high-density bedsits but a new accommodation that's been very successful around the world."
Those who may be interested in co-living were "a generation with a different approach", he added.
"We must recognise some young people are starting off in their careers, they don't necessarily want to live in a four-bed semi-D or in the isolation of a flat, and co-living has been so well received in London and New York."
Co-living would allow "new opportunity, new choice, where people don't have choice", he added.
"Co-living is appealing but the key thing is to make sure this is not abused.
"We looked at good practice in London and New York. We can work with the public and private sector to bring them into reality.
"I think people will be very excited by this."
Last week, charity Threshold labelled co-living as "21st-century bedsits with a glossy makeover" and said they should not be viewed as a solution to the crisis.
Mr Murphy also admitted social housing policy had "failed" in the past and different models would have to be used in future.
The minister pledged to bring in an affordable housing scheme and shared ownership schemes, which would allow more families a place on the housing ladder.
He also pledged to stop landlords evicting tenants from their rental homes after six years.
New rental legislation would prevent the current practice which allows landlords to evict tenants after six years without having to provide the tenant with a reason.
"That's not working for a lot of people, so we're going to get rid of that. We are going to allow tenancies of indefinite duration," he said.