Work is beginning on Lowfield Green, the first of eight sites included in the council's biggest house building programme since the 1970s.
The houses at Lowfields will be set around a grassy common and will include starter and family homes, wheelchair accessible bungalows and apartments for aged over 55 down-sizers.
40% of these homes will be affordable- offered at the lowest available council rent or for purchase under schemes which allow residents to purchase shares in the property with the option to top up or buy outright in the future.
Preliminary work has begun to clear the site. As well as keeping over 40 mature trees on the site, over 150m of additional hedgerow will be planted, with bird and bat boxes put up around the site.
Cllr Jenny Brooks, executive member for housing and safer neighbourhoods said:
"I'm excited to see work begin on what will be 165 high-quality, well-designed homes for York.
"By keeping control of the development the council can make sure that we can build more than twice the number of affordable homes over the minimum planning requirement under a variety of schemes to help meet the needs of a broad range of residents.
"Labour witter on about affordable housing but achieved little during their tenure, and certainly nothing like the scope of this development. It's our Conservative-led council that's delivering the goods."