City South Manchester Housing Trust has awarded an £8m contract to Bramall Construction North West to modernise 900 tenants' homes across Fallowfield and Hulme.
If Bramall performs well over the 12 months of the contract it could be extended to five years and £50m.
The firm will initially carry out internal work by refurbishing new kitchens and bathrooms, but additional improvements such as new windows and doors may be installed if required.
The housing refurbishments are part of a £92m improvement programme, designed to boost tenants' quality of life by improving homes beyond the Government's basic Decent Homes Standard.
In the next 12 months, the trust plans to spend around £14m on improving homes across South Manchester, with all work due to be completed by 2013.
Bramall will begin work when Manchester City Council tenants switch to City South Manchester Housing Trust on June 2. Manchester Working is the second contractor involved in the scheme.
Bramall will also offer training programmes and apprenticeship schemes as part of the new contract, and plan to take on around 20 new apprentices a year.
Impact Framework advised Bramall on the procurement process.