The development by Robertson Partnership Homes, on behalf of the council and Hillcrest Housing Association, will see 123 flats and 40 houses built on land where the Bucklemaker and Butterburn Court blocks stood on Derby Street before being demolished in 2013.

Five of the houses will be fully detached with the remaining 35 homes terraced. Twelve of the flats will be two storeys high with another 18 listed as supported accommodation.

David Zwirlein, Hillcrest director of development and new business, said: “It’s exciting to be part of the transformation for Dundee’s Hilltown so we are delighted that this project has been given the green light.

“Not only will the homes be good quality and affordable, they will be energy efficient and meet a range of housing need.

“A mixture of flats and houses as well as social and mid-market rent means that we will deliver a development which addresses the shortage of affordable rented housing in the city.”

Stewart Shearer, managing director of Robertson Partnership Homes, said: “The Derby Street development will provide a significant boost for the area in providing much-needed affordable housing that is fit for the needs of the community.

“The decision of the planning committee today to approve the development will be fantastic news for those awaiting housing and we are looking forward to bringing forward this important development.”

Robertson Partnership Homes development director, Joanne Walker, added: “The provision of 163 additional affordable housing units will be a welcome addition for the community and today’s decision is a terrific boost for the whole area.”

The Regeneration Framework in this proposal presents a basic urban building plan for the Derby Street area, with town houses and apartments to the western edge of Strathmartine Road and recreating Russell Street as a pedestrian link between Strathmartine Road and Derby Street.

Designed by Collective Architecture, the development reintroduces Russell Street as a pedestrian thoroughfare, which will contribute positively to permeability in the area for new and existing residents. The re-introduction of Russell Street is one of the principal features of the scheme and would enhance the public realm.

A total of 150 car parking spaces are planned within two courtyard areas along with 10 additional spaces in front of properties and nine more on-street spaces.

The maximum height of the flats was reduced from seven to six storeys to take into account the surroundings. The buildings will be significantly smaller than Bucklemaker and Butterburn Court — both of which were 22 storeys high.