The Co-operative Group has secured outline planning permission for 490 homes as part of a 170-acre mixed-use development plan at Basford East near Crewe.
The scheme near Weston Village was approved by the Cheshire East Council planning committee.
According to a report ahead of the meeting, the site was earmarked for use as a warehouse and distribution park within the Crewe & Nantwich local plan, but was approved for housing as 'the council cannot demonstrate a five-year supply of deliverable housing sites'.
The application at Basford East is for the first phase of construction on the large plot of land. Alongside the houses, The Co-operative would develop a 21,500 sq ft primary school, pumping station, substation and park areas.
The development will include 15% affordable housing, negotiated down from 30% by the developer due to viability issues.
The site is currently agricultural land.
Further applications are expected to be submitted to deliver more homes, commercial space, retail and medical facilities, a restaurant and community uses.
Geoff Player, director of commercial and investment property at The Co-operative Group, said: "We have been working closely with Cheshire East Council for a number of years to bring forward the mixed use development of Basford East and so we are delighted that the outline plans for phase one have been approved.
"Phase one will unlock this important strategic development alongside the new Crewe Green Link Road creating a sustainable community including up to 490 residential dwellings, a primary school, landscaping, recreational open space and wildlife areas.
"Of equal importance, Basford East also helps to reduce the pressure to release unplanned and speculative housing sites in less suitable locations within Cheshire East."
Questions over Cheshire East's housing pipeline up to 2030 have been repeatedly raised by planning inspectors and local developers. The examination into the council's local plan was suspended at the end of last year due to 'serious shortcomings with the council's objective assessment of housing need and future provision' according to the planning inspector. Cheshire East now has until July to submit more evidence and define its development sites before the examination begins again later in 2015.