Barratt Homes this week began building at the Cottam Meadow site in Dunnock Lane.
And community leaders have welcomed the move, as part of the development of Cottam Hall.
The scheme will include a mix of three and four-bedroomed homes, and all properties are expected to be built by 2017.
Barratt Homes sales manager, David Ince, said: “Cottam Meadow will be a fantastic new development in a fantastic city.
“Prices at the development mean it will appeal to potential home owners across a wide range of budgets and, with a large number of different house types set to be introduced, there really is something for everyone at the site.”
Coun Julie Buttle, who represents Lea ward, said: “Cottam Hall has been unfinished for a considerable length of time and we welcome the new development there, and the commencement of the rest of the phasing.
“It is good the development is taking place but we also want the rest of the development and the separate facilities to go with it. But the main message is we knew the development was going to happen and we are pleased things have started moving.”
She added: “As ward councillors we are monitoring the site in terms of security and contractors’ vehicles because we are going to end up with things like dust on the roads.”
Plans were approved by Preston Council last year for the development on land south of Cottam Way, to the west of Canberra Lane.
The proposals, for Lea ward, were for 104 homes as well as associated roads, footways, open space and landscaping.
Barratt said the new development had been awarded a Built for Life commendation. Building for Life 12 is a guide for developers to ensure new homes and their neighbourhood are as attractive, functional and sustainable as possible. Designs which properly address 12 key design issues can then use the Built for Life kitemark.
At Cottam Meadow, a part exchange scheme will be available, as well as Help to Buy, allowing people to buy a new property with a five per cent deposit.