Homes England has announced a £16 million infrastructure grant to Caddick Group to help deliver Leeds South Village.
The derelict land in the city's South Bank is set to be the location of a new mixed-use neighbourhood with nearly 2,000 homes.
The funding will allow Caddick Group to progress vital infrastructure works at South Village including roads, utilities and significant green space.
The site has outline planning permission for 1,925 homes, some of which will be affordable. There will also be commercial and green spaces.
The site will also be part of new plans to establish a Mayoral Development Zone (MDZ), which would act as a powerful delivery vehicle to unlock up to 20,000 new homes, local jobs, major new public spaces, cultural destinations and commercial developments.
Housing Secretary Steve Reed said: "The government is building the homes we need and transforming neglected brownfield into thriving places where people want to live.
"Our cash injection in Leeds will not only see local families achieve the homeownership dream but it will also open the door to job opportunities, community facilities, and more green spaces. By working together, we can make a real difference in this special part of the city."
Amy Rees CB, Homes England Chief Executive, said: "The agency is proud to support meaningful collaboration, powered by new funds, blended interventions and even deeper regional relationships, that mean once redundant spaces can become thriving places to live, work and grow for generations to come. We are working at pace with partners across Leeds and West Yorkshire, and in places across England, to accelerate housing and regeneration delivery for people the length and breadth of the country and to help boost economic growth."