The £180m residential scheme is being developed by English Cities Find, a joint venture between Muse Developments, Legal & General and the Homes and Communities Agency.
Phase one, known as Vermilion, was completed in 2012 and provides 271 new homes .
Contractor John Sisk started phase two, known as Aurelia, last summer and is due to complete 165 homes in early 2015.
The third and final phase will see a further 216 homes built around a shared communal garden.
Architect Project Orange has designed thye new residential blocks to stand out in their own right by using a combination of high quality brick and aluminium panels with carefully placed balconies.
Once complete, Rathbone Market’s regeneration will have transformed a rundown post-war housing and market site, delivered 652 new private and affordable homes and provided a new and improved permanent square for the historic market.
Duncan Cumberland, Director of English Cities Fund said: “Phase Three’s approval is a momentous occasion for us and we are extremely proud to say that we will soon complete the transformation of Rathbone market.
“Ideally, we would like to be on site and starting work before the end of the year.”
Phase Three is expected to be complete by late 2016.