Salford City Council has given outline planning permission to Arndale Properties Management for 175 new homes on the site of the former GUS warehouse in Eccles.
The new homes would be built on a derelict industrial site alongside the Bridgewater Canal.
The approval was welcomed by Sky Properties, which views the housing scheme as complementary to its submitted plans for a £70m facility to recycle business waste and generate renewable energy.
Sky's ten-acre Green Lane Eco Park would be constructed on disused industrial land off Green Lane in Monton, Salford, and could potentially provide enough energy to power 15,000 homes as well as heat for local businesses.
Sky Properties said the new canal side homes could receive their heating and power from waste treated at the Eco Park, which would incorporate a gasification technology from ENERGOS, a division of Salford-based sustainable energy business ENER-G.
Anthony Hirsch of Sky Properties said: "The site of the former GUS Home Shopping Warehouse is on the opposite side of the Bridgewater Canal from the proposed Green Lane Eco Park, which has been sensitively designed taking into account the Bridgewater Canal masterplan and aspirations for the Monton area.
"In determining this application, which was submitted six months after the Green Lane Eco Park application, officers and members should have considered issues associated with the combined redevelopment of both the Green Lane Eco Park and GUS sites."
The Sky Properties application is expected to be heard by the Salford City Council in May.
The company said the Greater Manchester Chamber of Commerce and the North West Institute of Directors have both supported its proposal.
Subject to planning permission being granted, Sky Properties aims to start construction of the Eco Park in 2011 and it is anticipated that the project would take some two years to complete.
Sky Properties previously sought planning permission for houses on the site. In 2006, Salford City Council refused planning permission for an application for housing on the Green Lane site, and an appeal to the Secretary of State for Communities and Local Government was rejected, upholding the council's decision to protect the site's designation for employment use.
Other proposals put forward for the site, including offices, warehousing and leisure uses, were not deemed in accordance with the council's unitary development plan policy, which seeks to maintain an adequate supply of employment land.
The development of the site for waste uses is in conformity with Salford City Council's development plan and the site was deemed suitable for waste uses in the Greater Manchester waste development plan document preferred options in November 2009.
Sky Properties has carried out work to make the land safe over the past few years, including clearing it of toxic substances, demolishing unsafe structures and making it secure from unwanted attention from travellers and vandals.
Sky acquired the land in 2003 as the former home of the Mitchell & Shackleton engineering company.
At the time of the acquisition, other industrial occupiers Plasticon, North West Forge, Paul Gardner Engineering and Levertech were operational on the site.