Officials have started work on knocking down the buildings on Chervil Rise, Heath Town, as part of a project that will continue until June next year.
Contractors, DSM, have been appointed were carrying out preparatory works at the end of last week.
The seven-month programme includes the removal of garages, a disused underground car park, 36 maisonettes and other buildings that have been vacant for some years.
The demolition will pave the way for the development of more than 300 brand new homes for sale and rent, including new council homes, across several sites as part of the revised Heath Town Masterplan.
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More detailed proposals for the development of these areas will be announced as the council works with developers to build out sites identified for new homes in the plan.
The new homes will be a mixture of one and two bedroom apartments, and two bedroom bungalows, as well as two, three and four bedroom houses. All of the new homes will have their own car parking.
Phase one of the enabling works at Heath Town saw the demolition of walkways and garages in the Hobgate Road area of the estate, and other works included disconnecting and re-routing the district heating pipework and the refurbishment of the ground and lower ground floors of Ling House to provide new office, meeting and activity space for the Hope Family Centre.
The news comes as in summer this year it was revealed that only one bidder had applied to take on the Heath Town. That meant that the formal bidding process to regenerate the area could not go ahead, and the council had to look again at ways of developing it.
Now, the masterplan submitted by Wolverhampton Council's Housing Services Department shows how it hopes to make changes to the former Long Ley School site, as well as the Chervil Rise shopping precinct and maisonettes as well as the adventure playground on Hobgate Road. The Qualcast Road, Alma Street, Wyrley Street areas and the Former Duke of York site on Wednesfield Road have also been chosen for development.
A statement in the plan which was released in June said: "City of Wolverhampton, Wolverhampton Homes and the HCA commissioned a masterplan for the estate. This provides a long-term vision and masterplan for the area and a framework through which future improvements can be implemented. The masterplan was developed to plan for comprehensive, balanced and sustainable regeneration of Heath Town in line with community aspirations and needs.
"While the opportunity for wholesale re-development of the estate was not a viable option, there are a number of existing opportunities for new development."
The adventure playground on Hobgate Road has already been demolished under phase one of the works.
The area of Qualcast Road, Alma Street, Wyrley Street are also cleared sites according to the plan, ready for housing development.
The Heath Town bridge will also be protected and maintained, apart from the section which attaches to Chervil Rise.
Improvements will be made to the existing multi-use games area and Grosvenor Street playing field. Existing car parking facilities will be upgraded whilst the new car parking is also installed. The district heating system will be extended. New bin stores, electricity and heating supplies will be fitted as well as drainage.
Councillor Milkinderpal Jaspal, Labour councillor for Heath Town, said: "I think everyone who lives and works in Heath Town will welcome this latest stage of the work.
"I know it is frustrating that it seems to have taken a long time to get to this point, but it will be worthwhile in the end. I look forward to seeing the project progress and be completed by June next year."