The former Sunbeam site in Paul Street, Blakenhall, will be converted into 115 residential properties, after formal approval was given by Wolverhampton City Council planners on Wednesday (18 June).
The development of a site, which has been derelict since 1997, is a boost for a key gateway into the city centre.
The plan, put forward by former Rugby player Liam Wordley, will see 32 of the houses providing accommodation for people with learning disabilities. The remaining properties would be made available for private rental.
Part of the building will be demolished and room made available for 37 parking spaces, a courtyard containing an outdoor games area, cycle parking and charging space for mobility scooters.
Other support facilities include a laundry, a small shop combined with the concierge office.
The factory, known as Sunbeamland, dates back to the 19th century and housed a number of manufacturers, most notably cars.
Mr Wordley said: "We have been preparing the site and with planning permission being formally granted we are looking forward to starting work immediately and bringing this fantastic building back to life."
Councillor Peter Bilson, Wolverhampton City Council's Cabinet Member for Economic Regeneration and Prosperity, said: "It is fantastic news that this exciting proposal has been approved.
"The Sunbeam site has been derelict for far too long and the regeneration of it is very welcome. It is also very pleasing that the majority of the locally listed building will remain as part of the development.
"We are committed to regenerating the city and developments such as this will help us achieve that."
- released: Friday 20 June, 2014