The city council wants to demolish 184 deck-access maisonettes in New Park Village's Ellerton Walk and replace them with new homes for rent and sale.
The development will also incorporate a number of environmental improvements and new parking spaces.
It comes after consultation with residents in January which saw almost 75 per cent of the 161 returned surveys supporting demolition of the 1960s-built buildings, rather than refurbishment or retaining them.
The New Park Village estate, which includes just over 400 properties with Ellerton Walk at the centre, has been plagued by incidents of fly-tipping and anti-social behaviour in recent years.
Councillor Peter Bilson, the council’s deputy leader and cabinet member for city assets and housing, said: “Wolverhampton Homes initiated a study to establish the potential for redeveloping the maisonette blocks in Ellerton Walk.
“This told us that there is the potential to demolish the failing blocks and create new homes, as well as to increase the number of homes overall and deliver a better estate environment.”
The multi-million-pound programme will be funded from the council’s housing revenue account capital budget approved by cabinet in January.
Councillors approved the plans at yesterday's cabinet resources panel.
Councillor Ian Brookfield, leader of the council, said: “The 100-year anniversary of council housing in Britain this year gives us cause to celebrate our work in the City of Wolverhampton.
“We are continuing to invest heavily in new and replacement council housing and this scheme will make a major difference to residents in New Park Village.
“It forms part of our housing plans to deliver better homes for all across the city.”
Subject to planning approval, the scheme will start in winter 2020 and will be phased in over several years to minimise the number of moves residents have to make.