Hull City Council has secured a grant from Homes England for Local Authority Accelerated Construction funding that will be used to support the creation of residential units on the Albion Square development.
The £800,000 grant will contribute towards development costs at Albion Square, which includes demolition, asbestos removal and site investigation works.
About 240 residential units are set to be built across the Albion Square site.
The Albion Square site is a key regeneration area of the city centre.
The new housing development, which will form part of the wider mixed-use redevelopment of Albion Square, will strengthen the developing urban community and activate a prime city centre site.