Plans for 500 new council homes and up to 180 private homes in Hull have been approved by the city council.
The authority's cabinet has backed a funding bid which aims to secure about £150m from the government's Private Finance Initiative.
The proposals are for the Danes and Thorpes areas of Orchard Park. It would also result in the demolition of about 390 council and privately-owned homes.
A decision from the government is expected in 2011.
Councillor Rick Welton, the council's cabinet member for regeneration, said: "Local people have been heavily involved in the development of these plans, and with significant support for demolition and rebuilding in the Danes and Thorpes areas, we give our full backing to their submission to the government.
"If the funding bid is successful, it would be a major boost, not only to Orchard Park, but for the city as a whole."
The council also approved separate plans for the phased demolition of the area's seven blocks of multi-storey flats.