The demolition of more than 120 homes has begun, despite opposition from some residents that the move has broken up a long-standing Cumbrian community.
Barrow Borough Council is spending more than £10m on regenerating the Arthur Street and Sutherland Street areas.
The authority said it was more cost effective to bulldoze the 126 old-style terraced properties than for them to be refurbished and brought up to date.
Some long-time residents had opposed compulsory purchase orders.
The houses were originally built for shipyard workers.
Lois Dodd, who lived in one of the now demolished homes in Sutherland Street, said: "This is absolutely devastating. Life here was happy before all this happened.
"Everybody knew everybody. No-one knows anywhere where I live now.
"I used to be able to sit on the front doorstep and knit in my old house. I can't do that now because of the traffic."
Barrow Council leader Jack Richardson said: "When these houses were built, almost 140 years ago, they were very desirable properties.
"However, standards change and it was determined these houses could not be brought up to a reasonable standard at a reasonable cost.
"Once the demolition is complete, the council will start negotiating for a rebuilding programme which will involve private sector investment.
"They won't all be the same type of house and there will be green spaces to make area more attractive."