English Cities Fund has been granted consent to build 14 townhouses and 83 flats in Chapel Street.
The development site lies between Chapel Street, Barrow Street, Wroe Street and Islington Way. Work is expected to begin in spring 2013. The blockw ill range from three to six storeys.
Phil Mayall, development director at ECF, said: "Plot E3 is the first of a number of sites we will be developing as a part of the wider Salford Central regeneration scheme.
"We have been working closely with the local community and Salford Council on these plans for a number of years and it's great news for all concerned that the transformation of Chapel Street can now begin."
When complete, the wider Salford Central scheme will create around 2.35m sq ft of commercial space, 849 new homes and 390 hotel rooms.
Cllr Derek Antrobus, Salford City Council's assistant mayor for strategic planning, said: "New shops will benefit local people and the new homes will meet the needs of our growing population."
The wider development, called Salford Central, is a major 44-acre regeneration scheme set to contain a mixture of uses.
The scheme is being delivered by ECF, a joint venture between Muse Developments, Legal & General and The Homes & Communities Agency.