Advantage West Midlands and RWE npower have agreed a multi-million pound commercial property deal with housebuilder Persimmon to develop 600 new homes at Rugeley in Staffordshire.
The development, worth more than £98 million, will create a residential development on 60 acres of brownfield land previously used as the coal stocking yards for the former Rugeley 'A' Power Station.
It is the second major regeneration scheme for Rugeley announced by AWM in the past four months.
Plans to develop 40 acres of the nearby Towers Business Park were unveiled in September, with 700 new jobs in prospect.
Part of the Persimmon area for development is within the Towers Business Park site that has already seen an investment of £10.5 million from national regeneration agency English Partnerships through its National Coal-fields Programme.
The Persimmon development is expected to take seven years to complete.
Daniel Le Neveu, land director for Persimmon Homes West Midlands, said: "We are delighted to have been selected by AWM and RWE npower as preferred purchasers of the site and are looking forward to using our extensive experience in the area to deliver a high-quality, sustainable development.
"We expect to start on site around April and anticipate that homes will be ready for occupation during summer 2007."
Julian Pugh, development manager at RWE npower, said: "Npower is pleased that Rugeley A will add to the growing list of its former station sites to be successfully redeveloped into major housing schemes that meet both local and national needs on brownfield land."
Steve Holland, AWM head of asset management, added: "Rugeley has an exciting future - with the prospect of fresh economic prosperity generated by new jobs, investment and business and a choice of first-class, quality homes built to the latest design in an attractive environment.
"The agency has a key role to play in acquiring and reclaiming under-used land and derelict property that blights the image of many of our towns and cities across the region.
"Some of these sites would not be economically viable for the private sector because of the costs of reclamation, which is why the involvement of the public sector is essential."
Atis Real and Thomas Lister acted jointly for AWM and RWE npower.
The Towers development area, which totals 100 acres on the site of the former Lea Hall Colliery, is one of the West Midlands' major strategic sites pinpointed for development, creating new investment, business and jobs in Staffordshire.