Some £27.9m of funding has been approved to demolish social housing and build three times as many homes.
Labour-run Cambridge City Council wants to replace flats on Fanshawe Road in order to increase the number of "greener" properties.
An initial budget has been approved with 32 out-dated 1950s homes due to be demolished.
The overhaul would add 93 new homes with councillors saying there was a "real need" for the changes.
Tenants in homes that are to be knocked down will be offered temporary accommodation until the redevelopment is completed.
The overhaul is designed to tackle a shortage of council housing in the city amid concerns about future maintenance costs and "poor environmental performance" of the existing properties.
Labour ward councillor for the area, Lewis Herbert, said there was a "real need" to increase the amount of council housing in the city.
He added that "inevitably not everybody likes change" and pledged to support anyone with concerns about the potential overhaul.
The council hoped all the new-builds would be offered as affordable housing but that would be reliant on additional grant funding from the government's Homes England agency which had not yet been confirmed.
A second option would see 44 of the 93 homes available for council rent and the rest put up for sale.
Questions were raised at Tuesday's Housing Scrutiny Committee meeting about whether the new homes would be green enough.
Officers explained that the current proposed layout of the site made this harder to achieve, but said the ambition was to deliver the scheme to the Passivhaus standard or an equivalent level of sustainability -meaning less energy was needed to run them.
The council has previously been accused of marketing some properties to investors in Hong Kong, but the administration pledged the new home would only be sold to people looking to live in the city, reported the Local Democracy Reporting Service.
Fiona Bryant, council director of enterprise and sustainable development, said there would be a limit of one home per person.
Exact designs of the new development have not yet been set out and the council will need to submit an application as part of the normal planning process.