Piling work started on the £15m second phase development of the former Vosper Thornycroft shipyard in Woolston as local planners also gave phase 3 the thumbs up.
The foundation work will allow for the building of 152 flats and 16 three-bed townhouses at Centenary Quay, where the first 160 flats are nearly all sold.
A new library will also be built as a focal point while an 80-place nursery will offer childcare.
Phase three will include 329 residential units, a supermarket, cafes, restaurants and a public plaza to regenerate the area.
More than 1,600 homes are planned in total, including three landmark apartment towers along the banks of the River Itchen.
Crest Nicholson Regeneration’s Managing Director Debbie Aplin said: “We’d like to thank councillors for approving this important application for the third phase of Centenary Quay.
“This is an important phase of the development as it includes 329 new homes, of which 72 are affordable.”