The houses will be built on the 8.4 acre brownfield site at Saints Quarter, Steelhouse Lane, in the city.
It comes after Lovell Midlands received a £770,000 cash boost from the West Midlands Combined Authority to clean up the land.
And now officials have signalled the start of the development for the site, which has been derelict for more than a decade.
It will be comprised of 89 open-market homes and 62 affordable homes, consisting of two, three and four-bedroom homes.
Councillor Peter Bilson, Wolverhampton Council's cabinet member for city assets and housing, said: "This is another major development site supporting the regeneration of Bilston.
“We can now look forward to seeing more new homes this summer, in addition to over 400 homes already being developed at Bilston Urban Village.
“Saints Quarter will provide greater home choice for the local area, as well as continuing to support the delivery of our housing growth plans for the City.
“This development means more and better homes being delivered for residents and supports the extensive investment already being made by Wolverhampton Council with our investors in new housing, leisure, commercial and transport developments in and around Bilston.”