The Council said in a statement that the scheme would generate "valuable income" and would boost the borough's regeneration "while supporting local economy and construction industry and suppliers, creating new jobs and investment".
The majority of the new homes would be built within the £250 million Southwater development which also comprises offices, shops and leisure facilities. The Council said it had identified other sites for potential development in Malinslee, Woodside, and Hollinswood.
"This is about the council using land that it owns to construct houses and apartments to take advantage of a commercial opportunity to generate more revenue," said Councillor Shaun Davies.
"This is a very exciting project but is still in the planning stages and until the full assessment is carried out, sites will not be fully finalised. However, this very much fits with our position as a business supporting and winning council and we anticipate being at a stage where work can start in spring next year, subject to the necessary planning consents and funding criteria," he said.
"We are determined to reduce the council's reliance on government money by maximising every commercial opportunity that we can take advantage of and that is a perfect example of how we can do that," said Councillor Bill McClements.
"At the same time we are further supporting the physical, social and economic regeneration of the borough," he added.
The Council said it will carry out a feasibility study before any building can start. It said it expects construction to start in 2014 and to complete in 2016.