Funded by cash from housing developers, the scheme will see the town hall work alongside the city's Community Gateway Association (CGA).
It comes after a recent report highlighted hundreds of long-term empty units across Preston.
Coun Peter Moss, cabinet member for planning and regulation, told colleagues empty homes are a "blight" on both rural and inner city areas.
He said: "In terms of both bringing affordable homes back into use and improving the environment and public realm in areas that people live, it's a really exciting programme.
"We will be working in partnership with CGA, a steering group from the council will ensure that our priorities and our values are applied to this project.
"It's expected the majority of homes will go into the Select Move system."
A total of £400k has been allocated for the first 12 months of the project but with housing developers required to contribute funds to local authority affordable housing schemes, members were told the plan could expand.
Chris Hayward, director of development, said: "It may seem like a small amount of money but this is what we have in the bank at the moment.
"But in terms of planning permissions and section 106 contributions agreed in the future, there is potential for millions of pounds worth coming in for an affordable housing fund.
"How that is spent is up to the council in terms of new builds or refurbishment of properties.
"This is really important, it's almost like a pilot project."