Fife Council has given the green light to plans for a new £500 million neighbourhood at Kingslaw in Kirkcaldy.
Planning permission was granted in September 2012 subject to a Section 75 legal agreement, which has now been resolved.
Over 1000 new homes, a primary school, shops and a community centre will be provided by the new development.
The neighbourhood, proposed by Murray Estates for the north east of the town, will take shape over the next 20 years.
Affordable housing will be the first stage of development, which is expected on site next year.
The development, which will be known as Kingdom Park, is the final stage in long-term improvements to the area. Large areas of the site have been mined for coal and restored in preparation.
Affordable housing will be the first stage of the new development.
Improvements to the road network will also be made to resolve congestion issues around Redhouse roundabout.
Kirkcaldy area committee chairman Councillor Neil Crooks said: “This is especially good news … coming on the back of the recent approval of plans for the new Kirkcaldy East secondary school.
“The Kingslaw development is another important boost for this area and this application will bring a much-needed investment for the construction industry as we expand Kirkcaldy towards the Redhouse roundabout.”
Murray Estates will invest approximately £77 million over the course of the project in 817 private housing units and 273 affordable homes.
A neighbourhood centre including local shopping facilities and a community facility will also be provided, in a further investment of over £7 million.
Jestyn Davies from Murray Estates said: “We are delighted to secure planning at Kingdom Park. This is one of our flagship projects which has already attracted a huge amount of market interest both from housebuilders and retailers.
“We look forward to continuing our strong working relationship with Fife Council and to delivering this important addition to Kirkcaldy.”