The 29 hectare site in Beam Park will be redeveloped into a neighbourhood with a train station providing access to central London.
The area has the potential to host approximately 2,000 homes, with the possibility for up to 5,000 houses in associated nearby developments.
The Beam Park rail station will be built in partnership with Network Rail, Transport for London (TfL) and C2C Rail.
It is understood the station has been awarded £9 million in funding from TfL's Growth Fund.
Deputy Mayor for Housing and Land, Richard Blakeway, said: "The development of Beam Park will result in a vibrant new neighbourhood with major transport links, providing a new locus of jobs, activity and growth for south Dagenham and east London."
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TfL's Director of Borough Planning, Alex Williams, said: "Excellent transport links are key to supporting growth and regeneration across London. Beam Park is a prime example of how TfL is using its Growth Fund to work with the GLA and the boroughs to secure the delivery of transport schemes that will unlock development."
The London Development Panel has been tasked to provide the Mayor with proposals on how best to develop the site, with 35% of the project expected to deliver affordable housing.
The Mayor has also pledged to exit all areas of land currently owned by City Hall by the end of his mayoral term in 2016.
Beam Park follows the release of other major parcels of land including the Royal Docks in east London, the 10.6 hectare Stephenson Street site near West Ham station and the 40 hectare industrial land portfolio in London Riverside.
The development will help to achieve the Mayor’s London Plan target of building nearly half a million homes over the next ten years.
Councillor Darren Rodwell said: "Barking and Dagenham is London’s growth opportunity.
"Beam Park and the adjacent Ford Stamping Plant comprise one of our six growth hubs which collectively will deliver 35,000 new homes and 10,000 new jobs by 2035.
"These sites have the potential for 2500 homes and will not only enjoy access to the new Beam Park Station but also convenient access to the existing Dagenham Dock Station."
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