Milton Keynes Partnership backed the Gallagher Estates scheme, which will result in the single largest expansion area in the town.
The developer will now work with the partnership and Milton Keynes Council to ensure that infrastructure is brought forward to support the town development.
This will include four primary schools and a secondary school, a commercial belt, high street shopping area and local town centres. Community buildings such as health and day centres, parks and playing fields, allotments and public open spaces are also planned.
Milton Keynes Partnership chief operating officer Jane Hamilton commented: "This marks an important step in the life of Milton Keynes with the first significant expansion beyond the previous designated area."
The western expansion area will occupy 360ha of what is now mainly agricultural land. Gallagher Estates is also working on the 1,500-home Broughton Gate development, which will lie to the east of the town.