A total of 31 properties are to be built on land at Carrick Terrace and Hawthornhill Road in Castlehill.
The site will be transferred to Cube Housing Association as part of the council's partnership with parent company Wheatley Group.
Land on Carrick Terrace has been lying empty since 2013 when 48 properties were demolished.
A further ten properties, above a row of shops on Hawthornhill Road which have been empty for ten years, will now be levelled.
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One commercial unit still in use will continue to operate within the development.
Cube will begin demolition works early next year.
Councillor David McBride said: "This decision is another major milestone for the regeneration of Castlehill and I'm delighted that the whole area will undergo such a major transformation. The homes which were previously on this site were not the right size or type to meet the demand in the area.
We are committed to providing quality housing throughout West Dunbartonshire, which is exactly what will be delivered once this project is completed."
Cube Chair Li Ruine added: "We're delighted plans for Carrick Terrace have been given the go ahead.
"By working closely with our partners, we can breathe new life into the community and create energy-efficient, family-friendly properties people are proud to call home."
The partnership between Cube and the council is to deliver 300 social rented homes across the region.
(LM/CD)
