The units will form part of a new development of more than 100 homes on the former Armitage Shanks Tap Works site in Low Hill.
The money has come from a successful bid in the second round of Care and Support Specialist Housing Scheme (CASSH) and will provide 1 bedroom units, plus a facility for on site support staff.
The flats will feature the latest technology tailored to the requirements of the scheme and individuals, who will also have access to a communal garden, lounge and kitchen, allowing residents to socialise and get peer support.
Councillor Elias Mattu, the City of Wolverhampton Council's Cabinet Member for Adult Services, said: "The council is committed to helping vulnerable people to live independently for longer, and this model of supported housing will allow people with mental health needs to move out of residential accommodation and live in their own home with a suitable package of support."
Councillor Peter Bilson, Cabinet Member for City Assets, added: "The local Tenants and Residents Association has welcomed the proposals for the supported housing scheme and wider Tap Works development, which will see the transformation of formerly derelict industrial land.
"This successful funding bid is great news, not just for people with mental health needs, but also Wolverhampton."
The council's housing development team is commissioning the scheme on behalf of the disability and mental health team.
Officers are working to ensure the design specification meets the requirements of people with mental health needs, and that the care package is commissioned alongside the procurement of the building development.
- released: Friday 18 March, 2016