Plans for 1,500 new homes, a primary school and shops at the new town of Northstowe have been approved by councillors.
The decision to grant outline planning permission for the first phase of the new town - 10,000 new homes are planned by the end of the build - means developers Gallagher's could begin work in 2013 which would help to deal with the shortages of homes in the area.
Plans for the first phase also include a sports hub, areas of open space, a local centre, employment opportunities and a site for a household recycling centre.
A further report will be presented to the Northstowe Joint Development Control Committee early in 2013 with details of its financial viability.
The approval by councillors follows a public consultation in the summer and negotiations with developers.
In a letter to Cllr Ray Manning, Leader of South Cambridgeshire District Council, Housing Minister Mark Prisk said Northstowe was a "high priority" for the Government.
Detailed plans containing information on exactly where the homes, roads and facilities will be built on the site will now be developed. These are expected to be submitted on a regular basis throughout the next 12 months and council bosses have committed to consult regularly with communities, and a parish forum set up for the town.