In June, she attacked the Government for continually refusing to commit to the "town centre first" planning policy that was central to her recommendations.
Retail chiefs said Mr Boles' proposals marked the first time a minister had publicly admitted the high street in its traditional sense was beyond saving.
Bill Grimsey, a campaigner who has called on ministers to admit the high street is dying and needs radical reform, said: "As soon as I heard this I tweeted 'Hooray'." He added: "At last the message is getting through, that there are high streets out there that do need to be considered in a very different way. It's only going to get worse.
"We have been saying it for some time, high streets cannot continue to serve solely as a retail destination, they have to be seen as a community hub."
Another executive told The Daily Telegraph: "Given the over expansion into out of town shopping, and now the rise of the internet, there is just too much retail space. I think it's a clear and honest statement by the Minister."
Mr Boles department was unable to provide any more detail behind his plans.
A spokesman said there was no current estimate of how many homes could be created through the relaxed planning rules. He insisted the Minister was not "abandoning" the high street, and that creating housing closer to those shops in prime locations may actually boost business.
But in an interview, Mr Boles said: "People's shopping habits are changing very fast as a result of the rise in internet shopping and changes in lifestyle and working patterns.
"We need to think creatively about how to help town centres thrive in this new era. We want to encourage local councils to concentrate retail activity into the prime shopping streets in the heart of their town centres and adopt a more relaxed approach to underused retail frontages."
An estimated 14 per cent of high street shops are empty or boarded up after the credit crisis ripped through the retail sector. Big names such as Woolworths and HMV collapsed into administration, with some disappearing for good.
Online shopping accounts for roughly £1 in every £10 spent on retail, and internet sales are growing at a phenomenal rate.
But store chiefs have called on the Government to do more to help high street shops by cutting business rates. The Chancellor put the rates up again in the Budget, adding £175 million to retailers' costs during one of the toughest trading periods in recent memory.
B&Q is among those "shrinking" its stores, in part because of the rise of the web but also to trim its huge business rates bill.
Ms Portas warned the new proposals could jeopardise the high street's role as a "community place, a meeting place". She said: "My concern is that the local councils will just go for the easy option of 'let's turn it back to housing' and that mustn't happen."
Helen Dickinson, director general of the British Retail Consortium, said: "We need to see the detail of what is being proposed, but what I would be keen to make sure is that there is a joined up approach to this problem across every Government department, from the Treasury to the Department for Business and the Department for Communities and Local Government."