Waverley Borough Council have given the green light to a £100m mixed-use site led by Crest Nicholson.
The Brightwells project, for which planning permission was first sought in 2008, will see 239 homes built.
Of those homes, 167 will be for private sale and 72 will be purchased by Thames Valley Housing under a shared ownership scheme.
The project has attracted local opposition, however, with local interest groups claiming they were taking legal advice over councillors’ decision to approve it last week.
Plans also include 9,814 sq m of retail and leisure space with signed pre-lets include Marks & Spencer and a six-screen Reel cinema.
Crest Nicholson was appointed as development partner to the council in 2003 and now expects to deliver the project over the next three years.
It said the work would be financed through its own committed funds, with Surrey County Council also due to invest in retail and commercial elements after reaching agreement to acquire completed commercial units from Crest.
According to the council’s website, it will receive a capital payment of £3.2m from Crest Nicholson for the leasehold interest on the land.
The regeneration includes an additional £2m for highway improvements in central Farnham.
The Grade II-listed Brightwells House will be refurbished and extended as part of the project.
Crest Nicholson board director Chris Tinker said: “After many years of working in partnership with Waverley Borough Council to secure planning and pre-sell the commercial elements of the development, Crest Nicholson is very pleased to be in a position to commence the delivery of the Brightwells scheme.”
Julia Potts, leader of Waverley Borough Council and ward member for Farnham Upper Hale, said it had been “a priority for the council over many years” to regenerate this part of Farnham.