The measure, which came into force in Spain's most populous region on Friday just three days after it was approved by decree, is opposed by the conservative central government, which sees it an attack on private property rights.
But the government of Andalucia, run by the Socialist Party and the far-left United Left, argues it is needed to protect the most vulnerable amid a sharp rise in evictions in a region where over one in three workers is unemployed.
"We are defending the right to life in an emergency situation," a spokeswoman for the regional government told AFP.
The decree allows the regional government to expropriate properties from which people are about to be evicted for up to three years to allow them to continue to live there.
The government will only act in cases where families meet certain conditions, such as having a net monthly income of less than €1,600 ($2,000).
Families that benefit from the measure will have to pay a modest rent to the regional government, which will compensate property owners.
"The beneficiary will be obligated to pay 25 percent of the household's revenues" in rent, said Andalucia's regional housing minister, Elena Cortes.
The measure also imposes fines between €1,000 to 9,000 on banks and real estate firms that hold on to empty homes that are fit to live in a bid to increase the pool of affordable housing.
There are at least 700,000 empty homes in Andalucia, according to the regional government.
Deputy Prime Minister Soraya Sanz de Santamaria said the justice ministry would analyse the decree to see if it is constitutional.
"It affects the right to private property," she told reporters following a regular weekly cabinet meeting.
The measure has the backing of the opposition Socialist Party at the national level, as well as of consumer groups.
"It is a very positive step which other regions should follow," said Ruben Sanchez, a spokesman for Seville-based consumer group FACUA.
"If apartments are empty, it is generally because banks want to speculate and perpetuate a system which sets a price (for housing) that is well above the real value and maintain the great fraud that existed in Spain during the property boom," he added.
Spanish courts have executed 252,826 eviction orders -- including a record 75,605 last year -- since 2008, when a decade-long property bubble burst and Spain sank into recession, throwing millions out of work.
A series of suicides by people about to be evicted and regular television images of weeping families who have just been thrown from their homes has pushed the issue to the top of the political agenda.
In recent weeks a grass-roots group, the Platform for Mortgage Victims, has started staging small protests outside of the homes or offices of lawmakers from the ruling Popular Party to push for changes to Spain's tough mortgage laws.
They want the law to be changed to allow mortgage debts to be eliminated once a home is repossessed, a proposal which the government opposes.
Prime Minister Mariano Rajoy has called the protests outside of lawmakers' homes "harassment" and earlier this week his government announced a ban on gatherings within three blocks of any politician's home.
Andalucia, which has a population of 8.4 million, about the same as that of Austria, has been especially hard-hit by the economic downturn.
It's unemployment rate stands at 35.86 percent, way above the national average of 26.02 percent.