Members of Newport City Council’s planning committee granted outline planning permission to developer Tirion for the scheme, which would also include a school, retail facilities and a pub.
The plans would see 529 homes and 24 assisted living units built on the 17-hectare site on the site of the former Whiteheads steelworks in the Pillgwenlly area of the city.
According to a planning report, half of the homes would be affordable.
The report said that local residents had raised concerns about rising traffic levels if the development was approved.
But planners said in their report that it had been "demonstrated that there is highway capacity to adequately accommodate this development in a manner that would not be detrimental to the locality or highway/pedestrian safety".
The developer had also agreed to provide £20,000 to produce a travel plan and £5,000 to provide two bus stops on Mendalgief Road and Tirion would upgrade the road, widening it and improving key junctions, the report said.
Planners said that the location is a strategic site for Newport, is allocated within the Newport Local Development Plan for residential and education purposes and is "integral for the delivery of the council’s current five-year land supply for housing and to sustain the education provision within the area".
The report concluded that the "redevelopment of this large, derelict brownfield site, and resultant economic benefits, are to be welcomed".
Remediation of the site was completed earlier this year, and work on the project is expected to commence in the coming months with the first houses available next summer.