Proposals by one of the Queen's property and land estates have been approved for a new affordable housing scheme on two small sites in the village of Dunsop Bridge, Ribble Valley.
Duchy said the decision is pending final agreement of a Section 106 agreement.
Following a public exhibition and open meeting chaired by Lancashire County Council last summer, the formal application was submitted in September 2010.
Approval was granted last week and a project team will now liaise closely with the local authority to finalise the relevant details.
Designed by local firm Francis Roberts Architects in accordance with The Duchy of Lancaster's own residential design code, the proposed £2m scheme aims to ensure a seamless integration with the character and history of the village.
The plans include twelve 3-bedroom family homes built to level 3 of the Government's Code for Sustainable Homes and the national Lifetime Homes Standard, which many planning policies now require. Each property will also have its own private garden with hedgerows and allotments along the front and rear boundaries.
The new homes are expected to be built in two phases, each delivering six new affordable homes on sites close to the village school, hall and local shopping facilities.
The Duchy identified the two sites in consultation with the local community in 2008.
The Dunsop Bridge scheme will be the first manifestation of a Duchy initiative designed to support rural communities. The Duke of Lancaster Housing Trust, set up as a means of investing in residential accommodation which is both sustainable and appropriate to its location, will oversee the project, ensure the implementation of the Duchy residential design code and appoint a registered social landlord to manage and administer the completed scheme.
Paul Clarke, trustee and Duchy chief executive officer, said: "The Duke of Lancaster Housing Trust will help to ensure that the architect's vision is realised, that the homes are built to the highest possible standard and that the end results provides a number of sustainable dwellings for the future. We hope to be able to offer these new homes first and foremost to local residents – or to those who have been forced out of the village due to economic circumstances."