As principal contractor, it will begin on site in early 2019 at the former Birmingham City University campus in Perry Barr where 1,400 homes will be built to initially accommodate 6,500 athletes.
The accommodation will also feature a running track and green spaces and is a short distance from Alexander Stadium where the track and field events will take place.
After the games in 2022, the properties will be converted to provide a range of tenures – social and affordable rent, homes for sale, and for private rent.
The development, unanimously approved by Birmingham City Council’s Planning Committee, will also include a retirement village and a community centre.
The council-led scheme has attracted £165m funding from central government and £20m from the West Midlands Combined Authority.
Cllr Ian Ward, Leader of Birmingham City Council, said: “Since we announced our intention to bid for the 2022 Commonwealth Games, I’ve always said the event is about so much more than just 11 days of sport.
“The regeneration of Perry Barr will be the most tangible and transformative legacy we achieve as a result of hosting the Games, bringing investment and regeneration to area that has long been crying out for it.”
Waheed Nazir, Corporate Director for Economy at Birmingham City Council, said: “The fact that we have secured planning consent for such a scheme within 12 months of being awarded the Games demonstrates the ability of the public sector to drive forward major projects at pace.”
Future phases of the Perry Barr regeneration plan will be consulted on in 2019.