The new deal is the latest as part of the £1bn Build to Rent scheme.
The funds will go to developers Renaker under the Build to Rent scheme, which will allow them to build 779 new homes across two sites in Manchester and Salford. Each site will include a mix of one-, two- and three-bedroom properties.
497 homes will be built at the Greengate development in Salford, minutes away from Manchester Cathedral; and a further 282 will be built at their Cambridge Street development, in the heart of Manchester city centre and within easy distance of Oxford Road station.
Mr Lewis said: "Millions of people use the flexible option of renting so I'm determined to create a bigger, better private rental market offering greater choice for tenants.
The extra money will not only create 800 more homes for the people of Manchester and Salford, it will also create jobs and security for hardworking people — a vital part of our long term economic plan to secure a better future for Britain."
Andy Rose, chief executive of the Homes and Communities Agency (HCA), added: "This is a major investment in the private rented sector in Manchester. It demonstrates how the HCA, working closely with partners, is combining financial and local expertise to increase the private rented choice in areas where there is a high demand for homes."
