The planning committee of North Lincolnshire Council has approved the plan to build 2,500 new homes near Scunthorpe, UK.
The £1.2bn Lincolnshire Lakes scheme will create six new waterside villages.
The plan also includes the construction of a village centre, parks, community facilities and a new school.
North Lincolnshire Council leader Cllr Rob Waltham said: “This development has been nearly 20 years in the making and this is a milestone moment for confidence in housing development in North Lincolnshire.
“The scheme has been delayed for the past few years until we were able to keep our promises to local residents to put the right infrastructure in place first.
“With the government-funded flood defence scheme nearing completion on the Trent, and the greenlight earlier this year for the new motorway junction, the pieces are falling into place.
“Now planning permission is in place, the Lincolnshire Lakes scheme can really start. Children growing up across the region today will have the opportunity to start their families in lakeside communities in North Lincolnshire.”
As a part of the scheme, the developer will also be asked to contribute £5m for a secondary school, £518,000 for the B1450 Burringham junction improvements and another £1m to further improve to the B1450 Burringham Road.
As part of the Lincolnshire Lakes development, plans for a new roundabout on the M181 were approved earlier this year.
The new £13.5m junction would facilitate direct access to the motorway network from new and existing settlements. It would also act as a bypass for Burringham village.