Wates has began developing 157 new homes on the site of the former Dudley Guest Hospital.
The Butler's Crescent project is being carried out in partnership with Dudley Metropolitan Borough Council (MBC) and the Homes & Communities Agency (HCA).
Enabling works have been ongoing for the past three months in preparation of the main construction phase.
The development, designed by architect Armstrong Burton, will comprise of 127 new build homes, 30 refurbished properties and the full restoration of the locally listed former porter's lodge.
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The scheme has been named after renowned Black Country architect, Albert Thomas Butler, who was responsible for modifications to the previous hospital building.
Joanne Jamieson, MD of Wates Living Space Homes, said: "Commencing work on site brings to fruition years of careful planning and will see us deliver a significant project for Dudley that will provide high quality, affordable and energy efficient homes for the area.
"We will be using our presence to create training and employment opportunities for the local community and will draw on a network of local businesses from Dudley and the Black Country to help us deliver the scheme.
Cllr Gaye Partridge added: "This is an extremely welcome and exciting regeneration project.
"It will enable the provision of more affordable housing for our residents and bring an historic building back into use offering luxury apartments.
"This development compliments the regeneration of the area offering a significant economic and social boost to the local community."
(LM)
