The Milton Keynes Partnership (MKP) has secured approval for a mixed-use development after submitting revised plans to the UK Government.
The West End site project includes the construction of 400 homes, office and retail spaces, and a new 200-bed hotel.
The developer initially hoped to build 650 apartments, but the scheme was found to be unviable following the housing market crash.
"This is part of the HCA's remit to increase housing supply by bringing forward more public land for housing and mixed use development, and being flexible to create attractive market opportunities," said Paul Spooner, executive director for HCA Midlands, owner of the development. "We have worked closely with Milton Keynes Council to propose a new development that continues to support the city's growth aspirations and are pleased to be able to move forward to start bringing on board a developer partner."
MKP plans to appoint a developer for the project in mid-2011.
Work on the development is expected to begin in early 2012 with completion pencilled in for 2014 / 15.