The deal means Land Securities, which has already invested £100m in the chalk quarry sites, can proceed with the first 1,500 homes at Eastern Quarry, which are expected to be completed by 2020.
Eastern Quarry forms part of the Kent Thameside development of about 22,500 homes, to be built over the next 20 years.
The breakthrough came after Land Securities’ contribution to road improvements was cut from £40m to £25m.
This will be paid to Kent, Dartford and Gravesham councils in several instalments rather than upfront as first demanded.
The Department for Transport will pick up the bill for several major junction improvements, with local councils contributing to other costs.
The deal is being hailed by ministers as an example of how stalled projects can be revived through the renegotiation of deals between developers and councils.
Housing minister Grant Shapps said: “By putting heads together, by working across Government, by using a proportion of the New Homes Bonus to contribute towards the transport and infrastructure programme, but most importantly by actually having on-the-ground local partners around my table – we were able to get things moving.
“The deal now signed will create 60,000 jobs over the next 20 years with the first phase of the development at Ebbsfleet delivering 1,500 homes, with spades in the ground in the coming months. This is by any standards an historic housing deal.
“I’d like to pay special tribute to my colleague, Transport Minister Mike Penning, to the Leader of Kent County Council Paul Carter, to the Leader of Dartford Borough Council Cllr Jeremy Kite and the Head of London Development at Land Securities Colette O’Shea.”
He added: “We can use this model to deliver many more large-scale developments on brownfield sites –thereby helping to relieve our nation’s long-term housing crisis.”