All existing planning law should be scrapped and replaced with a new consolidated act, says a benchmark report.
The Centre for Policy Studies (CPS), a right-leaning thinktank, criticised the "modest gains" made in the government's attempts to reform complex planning laws.
There are 118 acts within British planning law which serve as a "lawyer's banquet,". The reams of regulation have been highlighted as a significant barrier to growth in the wilting economy.
"The coalition is right to have identified the complexity of the planning system as a major obstacle to growth," said Tim Knox, director of the CPS.
"It should learn from the historic success of Milton Keynes and the plans for a new garden city at Old Hatfield to see how implementing real reform can free up the planning process to the great benefit of both would-be homeowners and the wider economy."
Private firms should also be encouraged to build a new wave of garden cities, said the CPS, similar to those developed in the postwar period, to increase the housing shortage and increase output in the economy.
The CPS pointed out that planning laws could become even more complicated as the coalition introduced 278 wider regulations in its first six months in office.
Tony Blair's Labour government introduced 150 new regulations in total.
Among its other recommendations, the CPS said "sunset clauses" should be widely introduced in planning law. Sunset clauses are a mandatory review of the effectiveness of a regulation after three years.
Prime Minister David Cameron had promised an overhaul of planning laws to unshackle the struggling construction sector, which has been in decline since the end of 2011 and weighing heavily on GDP.
Cameron set up a Cabinet sub-committee for growth implementation, chaired by Chancellor George Osborne, which is reviewing the state of planning laws in the UK and how they may be holding back the economy.
He is also trying to reduce the impact of judicial reviews on building work.
"[We're going to] reduce the time limit when people can bring cases, charge more for reviews - so people think twice about time-wasting - and instead of giving hopeless cases up to four bites of the cherry to appeal a decision, we will halve that to two," said Cameron in November.