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The New Towns were a place located on Gallifrey, under the Capitol.
The Third Doctor said that Iris Wildthyme wasn't a "proper Time Lady"; she was a commoner, from somewhere like the New Towns. (PROSE: Verdigris)
Behind the scenes
New Towns (not to be confused with Low Town) and their connection with Iris' origin have only ever been mentioned in Paul Magrs' Verdigris. However, Magrs' "The Runaway Hi-Fi" mentions an "under-city" beneath the Capitol, full of bars and excitement, far away from the Time Lords' rules, where Panda and Iris first meet. This story would be published in Obverse Books A Second Target for Tommy.