More than 500 crumbling and empty homes are to be demolished and 130 families rehoused thanks to a £6.2m grant.
It will be spent in rundown areas of Hartlepool, Middlesbrough and Stockton in the Tees Valley.
A total of 536 properties will be bulldozed and 133 families moved to refurbished or new homes.
Residents to be rehoused include those living in Carr Street and Hopps Street in Hartlepool and the Gresham and St Hilda's areas of Middlesbrough.
Households living in Parkfield in Stockton will also be re-housed using the government money.
Tees Valley Unlimited (TVU) successfully submitted a bid for money to the Department of Communities and Local Government.
TVU board member Alison Thain said: "The announcement ends the uncertainty for scores of residents across Tees Valley.
"They will be relocated to better quality homes within a healthier environment and several pockets of dereliction will be given a new lease of life."