The new competition, set up by the ACT Institute of Architects, the ACT government and Defence Housing Australia (DHA), is aimed at shaking up ideas for affordable and sustainable housing in urban infill areas – and potentially changing planning regulations.

According to the institute, ideas thrown up by competition entrants could be a basis for consideration by the ACT Planning Authority.

The competition's website calls for designs "not constrained by the current ACT planning control environment, so as [to] enable a strong focus on liveability and sustainability rather than just compliance".

The institute president, Andrew Wilson, said this was about the essential next stage of Canberra's development to becoming a "layered" city where people lived closer together.

But he said this meant there was a need to plug the crowd for solutions.

"There may be a market for smaller types of dwellings and that's where the professional challenge is. You still have to solve issues of privacy, access to sun and acoustic separation," Mr Wilson said.

The proposed sites are under wraps, and young architects have just been given a simple block map to work with, along with current construction guidelines.

They are being asked to submit "viable" ideas for attached housing, small-scale apartments and individual houses.

"One hundred years since foundation, it is time to consider new, bold options," Mr Wilson said.

Urban infill and public housing have both been testy issues of late. The plans for the proposed Yarralumla brickworks development have met opposition, and Red Hill residents too have voiced concerns about local infill development.

The ACT government's public housing redevelopment plans have also come under the microscope, with advocates worried about whether or not tenants would be pushed out of the inner city.

Mr Wilson said the competition responded to a growing need to consider new options for affordable housing and also for sustainable building in Canberra.

ACT Minister for Planning Mick Gentleman said the project aimed to give architects and planners incentives to think about options for the city.

The institute said on Thursday that winning designs could eventually be constructed by the ACT Community Services Directorate, and travel grants worth $10,000 were among prizes.

With submissions due by October 23, finalists' work will be exhibited as part of Design Canberra in November.