Developers Auldyn Construction have signed an agreement with Ramsey Commissioners to build phases three and four of the new development on the site of the former Lezayre estate.
The 40 properties will cost a total of £6.5 million pounds, and work will begin on site on June 22.
It's the penultimate phase of the largest capital scheme ever undertaken by the local authority, which will involve the construction of 149 homes at a cost of £25 million.
Chairman of Ramsey Commissioners Sylvia Beattie is pleased phases three and four have been brought together, which has been possible thanks to the board's 12 month programme of providing alternative housing for tenants from the existing properties.
The demolition of the previous development and the completion of phases three and four is scheduled for early 2011.
The scheme is being undertaken in partnership with the Department of Local Government and the Environment, and the contract for phases three and four was signed by Mrs Beattie Beattie and Director of Auldyn Construction Tony Wood at the Town Hall.