Northumberland County Council said it wants to build the scheme on land between High Callerton and Ponteland, on the north-western fringes of Newcastle.
The local authority said that property firm Lugano Group has been involved in working up plans for the development. It said more than 500 of the homes would be affordable and infrastructure would include a relief road and flood alleviation scheme for Ponteland.
The government has set a 31 July deadline for bids to create garden villages of up to 10,000 homes. According to a prospectus document, these must be new settlements rather than extensions and must be backed by councils. The successful bids will be supported with funding, advice and possibly deregulated planning regimes.
Northumberland County Council leader Grant Davey said: "These are exciting plans that could significantly benefit the county, provide a much needed economic boost to the region and deliver hundreds of affordable homes."
Local councillor Allan Hepple added: "Clearly local councillors, local stakeholders and nearby communities will want to be actively involved as the process develops, and working with them on the detailed proposals will be a major element of this project."