A total of 35 new homes will be built in Wellsea Grove for social housing provider Stonewater.
The project will contribute towards North Somerset Council's target to provide 150 'affordable' homes each year.
In addition, the council is providing a £875,000 grant towards the development which has also received funding from the Housing and Communities Agency.
Phillippa Yeates, Development Manager for Stonewater, said: "It's vital that young families and first time buyers are able to find affordable housing in the Weston area because they play such an important role in supporting local shops, services, businesses and amenities.
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"We hope these 35 new homes will go some way towards helping local people into home ownership as well as ease some of the pressure on housing waiting lists. We look forward to working with North Somerset Council and Keepmoat on this project which will also create local jobs in the community during its construction."
Edward Rees, Regional Director at Keepmoat, added: "We are delighted to be working with our partners to bring these much-needed new homes to Weston-Super-Mare. The UK's shortage of affordable housing is well-documented, so it's great to be involved in such an important project."
The project is due to be completed in summer 2017.
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