The Paston Reserve development in Newborough Road, which will see 1,050 homes built, has been approved after developers finally reached an agreement.
Peterborough City Council had previously threatened to remove planning consent because the different groups which make up the consortium behind the project could not agree the sharing of costs and profits.
However, the developers met the council deadline of August 11 to agree terms.
The next phase of the site is expected to get underway shortly as full planning permission has also been granted to Keepmoat Homes to build 457 properties of the total agreed for the site.
Cllr Peter Hiller, council cabinet member for growth, planning, housing and economic development, said: “It’s great news that this issue has been resolved and is already paying dividends with the next phase of the Paston Reserve development getting full permission to start building much-needed homes.
“I’m glad the landowners have quickly responded to our recent calls to finalise the agreement which means construction can be kick-started and facilities are provided for the community.”
The development will also see the construction of a new primary school which is expected to open in 2020. There will also be additional community facilities including play areas. Provision is also set out for a new secondary school, but this will require its own planning permission at a later date.