The houses will be built in four areas: Harper Road, Rodney Road, St Mary's Churchyard and South Newington. Demonstration housing, which will also be sold, will be built on Wansey Street.
The programme will go ahead in two phases. The first will involve developing council-owned sites and securing affordable housing on privately developed residential schemes. The second phase will consist of new-build housing on the Heygate Estate site.
The council is looking for a development partner for the projects.
The move comes ahead of the publication of the the masterplan for the area, which is being prepared by a team including Foster and Partners, GVA Grimley and Arup. This is due to be presented to the council executive in April.
Catherine Bowman, executive member for regeneration and economic development at the council, said: "This decision increases the momentum. We can deliver early benefits for local residents and enable the wider scheme to go ahead."