The scheme to develop a rundown brownfield area of Northampton has been on the cards for more than six years.
It is being led by the Homes and Communities Agency, which will now seek to bring a developer on board from its panel of firms.
Officials from Northampton Borough Council first approved plans for the redevelopment of the Ransome Road area in Far Cotton in 2004 but because it took so long to move forward had to be resubmitted.
Anthony Sowden, area manager for the HCA, said: “The decision gives us the green light to begin the process of bringing a developer on board to take forward the housing scheme.
“This project represents a major element of the plan to support Northampton’s growth ambitions.”
Funding was recently agreed by central Government to invest £2.3m in road improvements for the first phase, which will see 450 homes built.
This will include a mixture of flats and houses as well as a new bridge across the former Northampton to Bedford railway line, a community centre and a restaurant next to Delapre Lake.
Parts of the site were once used for landfill and are likely to be capped off with clay to make them safe from any waste contamination.
The site is part of wider plans for the Waterside area of Northampton, and the junction works will ultimately support the regeneration of the adjacent Avon/Nunn Mills site.