The new FirstBuy homes will be commissioned by councils and housing associations, with prices set in line with local wages to ensure mortgage payments do not exceed a third of average household incomes.
Announcing the policy today, Mr Corbyn warned that high prices, excessive rents and a "chronic lack of affordable housing" are ruining the lives of a generation of young people, families and aspiring homeowners.
He promised that a Labour government will start by "fixing the housing crisis immediately", putting the needs of younger house buyers and local workers first.
"As part of our massive housebuilding commitment, Labour will ensure 100,000 FirstBuy Homes are available at discounted rates to local first time buyers," Mr Corbyn said.
"[We] will usher in a new era in council housebuilding to build more council homes than at any time for over 30 years so that the broken market is fixed to provide homes for the many, not investment opportunities for a wealthy few.
"This will transform the housing market."
The party's New Deal includes previously announced plans to build 100,000 genuinely affordable homes a year by 2022. It also promises a two year stamp duty holiday for first-time buyers, and an extension and re-focusing of Help to Buy so that it is only for first-time buyers.
A new Homeowner Guarantee aims to strengthen the safety net for homeowners who fall ill or lose their job. And an extra 4,000 homes will be made available to those with a history of rough sleeping in order to eradicate rough sleeping before the end of the next Parliament.
The FirstBuy scheme, which was hinted at in the manifesto, will see the creation of 100,000 new discount homes targeted at first time buyers. Prices will be determined locally, so that mortgage payments do not exceed a third of average household incomes in the area.
Local authorities will have powers to set local connection requirements, with scope to prioritise "key workers" such as teachers, nurses and tradespeople.
On resale, homes would be sold to other first-time buyers, with the aim of preserving the discount to keep them affordable.
"After seven years of failure, a Labour government will shift the housing market decisively towards first-time buyers on ordinary incomes," said Shadow Housing Secretary John Healey.
"Labour offers a New Deal on housing between the people of this country and a new government. It is a bold, long-term plan for housing to help those being let down most by a broken housing market and failing Conservative policy – young first-time buyers, private renters and people needing new social rented homes."
The Conservative Party has pledged to uphold its 2015 manifesto promise to build one million homes by the end of 2020, while delivering half a million more by the end of 2022.
It has also set out plans for a "new generation" of fixed-term council housing linked to a new Right to Buy.
Responding to the Labour announcement, Andrew Percy, Minister for the Northern Powerhouse said: “This is just another unfunded promise Jeremy Corbyn can’t deliver.
“Last time Labour crashed the economy, housebuilding fell to its lowest peacetime level since the 1920s – and with Jeremy Corbyn in charge of the Brexit negotiations and John McDonnell in charge of the economy you’d see the same all over again."