By David Ljunggren

OTTAWA The Canadian government of Prime Minister Justin Trudeau, under pressure over a lack of affordable housing, on Wednesday told cities to do more and said those who cooperated would receive federal cash.

Housing Minister Sean Fraser said cities needed to address excessive red tape and zoning challenges that he said were part of the issue. Authorities that cooperate will be able to tap a C$4 billion ($3 billion) housing fund unveiled this year.

"If you want the federal government to show up with financial investments that will directly support your ability to build more homes, give us a reason," he told reporters on the sidelines of a meeting of Liberal legislators in London, Ontario.

"We have new expectations - we want you to build houses near transit, we want you to build houses near campuses. We want you to build houses so families can access the services that they need ... It's not too much to ask."

His comments were the first since the official opposition Conservatives wrapped up a convention last week where members accused the ruling Liberals of botching the housing file. Polls indicate the Conservatives would win the next election and end nine years of Liberal rule if a vote were held now.

"We're facing a shortage of housing right now and that's why prices of homes have become far too high. It's not fair to young people," Trudeau told reporters.

His challenge is that housing is mainly the responsibility of the 10 provinces as well as major municipalities. Ottawa can give policy guidance and offer money to boost construction but cannot by itself build houses.

Conservative leader Pierre Poilievre says he will boost supply by slashing federal funding to cities who do not agree to increase the density of housing.

($1 = 1.3546 Canadian dollars)

(Reporting by David Ljunggren; Editing by David Holmes)