The Minister said the Government would back a new Bill, introduced in Parliament today by Conservative MP for Watford Richard Harrington, which would make the subletting of social homes a criminal offence.
Estimates suggest that between 50,000 and 160,000 social homes are unlawfully occupied across the country.
Tenancy cheats can earn thousands of pounds a year renting their social homes out to private tenants, while thousands of families are languishing on social housing waiting lists.
However, if caught these cheats face little more than losing their tenancy.
Mr Harrington's Bill would create a new criminal offence of subletting and allow for proceeds of subletting to be reimbursed to the social landlord in whose stock the fraud was committed.
Shapps said: "Tenancy cheats profit from renting out homes that were built to help those in greatest need. Due to their actions, thousands of families who could benefit from this vital support system are instead languishing on housing waiting lists.
"I am delighted that Richard Harrington's Bill will make this fraud a criminal offence so that the perpetrators don't just lose their tenancy but feel the full force of the law. And by introducing this effective deterrent against subletting, we can free up thousands of homes for those who genuinely need them.
"I look forward to working with Mr Harrington to give this Bill the best possible chance of being passed into law."
Conservative MP for Watford Richard Harrington said: "It has been a concern of mine for some time that whilst hundreds of people in my constituency are unable to access social housing and may sit on the waiting list for many years, a large number of properties are being sublet improperly - allowing those individuals who do so to profit at the expense of local authorities and preventing hardworking and the most vulnerable individuals and families from accessing homes.
"I welcome that this and previous Governments have introduced measures to try and tackle this problem. I think it is right that once and for all this offence is criminalised, giving local authorities greater powers to prevent and prosecute.
"I am pleased that this Bill has attracted support from MPs of all parties and that the Government are also lending their support to making this Bill law."
