Cherwell District Council voted in favour of the LDO to simplify the planning process at the Graven Hill site.
LDOs, introduced at the same time as the Planning and Compulsory Purchase Act 2004, effectively grant planning permission for specified types of development within a defined area.
Outline planning permission is already in place for 1,900 homes as well as a school, a pub and some shops and businesses on the 190-hectare site.
A report to the council’s executive committee from its head of development management said: "The draft LDO would facilitate and encourage self-build and custom build housing at Graven Hill by simplifying the planning process while providing certainty that individuality and variety in design would be supported within the parameters set by the masterplan and design code to be approved under the outline planning permission.
"The consultation response has not raised any significant issues or objections to the draft LDO, and only minor modifications are proposed in response to the comments received, to clarify the requirements of the LDO and to ensure that it is effective in facilitating the delivery of custom build and self-build development."