A Surrey council is to spend £5.1m on affordable housing by replacing 30 mobile homes with 35 new properties.
Guildford Borough Council is awaiting a decision on planning permission for the homes in Lakeside Close, Ash Vale.
The existing mobile homes on the site need to be replaced as well as work undertaken to reduce the risk of flooding in the area, the council said.
Work on the site could begin in 2013, subject to planning approval and the rehousing of existing tenants.
Councillor Sarah Creedy said: "The reform of housing finance by central government means we can now consider building new housing ourselves."