The major project has taken another step forward after a deal was agreed between Walsall Housing Group (whg) and developer Jessup.
The Grade II-listed building off the ring road will be restored and converted into apartments for people aged over 55.
An additional 123 homes for affordable rent and 31 for shared ownership will be built on land to the rear of the hospital building.The scheme was approved by city planning chiefs in May.
It is part of a wider redevelopment of land around the Royal Hospital site which has seen new homes spring up over the last few years on the former Cleveland Road bus depot site.
The completed site will also include a large open space and pedestrianised area to help connect the new development with the city centre. The work is expected to take around three years to complete.
Much of the iconic building, which dates back to 1848, will be preserved as a nod to its history. It will feature 38 one and two-bedroom apartments.
Rebecca Bennett Casserly, whg’s corporate director of development, said: “We are delighted to be breathing new life into this key gateway into Wolverhampton.
“We are already working with Jessup on the redevelopment of the former bus depot site, in front of the hospital, which is nearing completion. I am very proud that we are continuing our partnership work to transform the area further.
“We are very aware of the significance of this landmark site in the city and look forward to reporting on key milestones reached during the three year construction period.”
Clive Jessup, chief executive of Jessup, said: “We are excited to deliver this much awaited scheme with whg, delivering high quality homes and public open space for the community to enjoy.
“We appreciate the importance of the iconic former Royal Hospital building to the people of Wolverhampton and we are honoured to bring it back into use as a wellbeing scheme.
“This site will be developed using our West Midlands-based supply chain and local apprentices.”
Wolverhampton Council deputy leader and economy boss Stephen Simkins said: “The fact that works will soon get started on redeveloping this strategically important site is great news for regeneration in our city.
“We are working closely with Jessup and whg to ensure a suitable scheme is being brought forward that will uplift and transform this area and deliver new housing and hundreds of jobs – making the Royal site a key gateway to the city centre.
“Projects such as these are critical to our recovery from Covid-19 – creating jobs in construction and the supply chain, driving further investment and giving our businesses confidence to get back on their feet and grow.”