The council will now work with the developers to refine their proposals redevelopment of central South Oxhey, just to the south of Watford, with the aim of submitting planning application in December.
Around 500 new homes are expected to be built as part of the scheme and these will include a range of apartments and family sized houses.
A market square could also be introduced and better links will be created to Carpenders Park station.
Ann Shaw, Leader of the Council said “This is good news, bringing the provision of new, high quality, homes and shops closer.
“The Council is delighted that it will be moving forward with Countryside and Home Group, organisations with proven track records of successfully delivering such regeneration schemes.”