The Aldborough Manor project will consist of 22 affordable units following approval from Housing Minister Darragh O' Brien.
The development will be located on a site overlooking the River Slaney.
Aldborough Manor will comprise of one, two, three and four-bed homes.
The first 22 houses of the development will all be three-bed semi-detached houses.
Councillor John Mullen says the new units will help meet growing demand for housing in the area.
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