The old Victoria Ground, next to the A500, shut in 1997 when the club moved to the Britannia Stadium and has remained vacant ever since.
Plans for the 16-acre site include 130 homes being built initially, followed by a further 70.
David Sidaway, from the council, said he was proud to have secured investment for the "very important site".
A plan to build offices there was shelved in 2004 and in 2007 St Modwen said the recession had affected development opportunities.
Further plans for housing were announced in 2013 but never happened.
Dave Smith, from developer St Modwen Homes, said: "We understand that the Victoria Ground is an important site for both the people of Stoke-on-Trent and the city council.
"Having taken the comments from the public consultation on board, particularly for the second phase of development, we are looking forward to turning our plans for the Victoria Ground site into reality and breathing new life into the community and surrounding area."
After working with the Environment Agency over potential flooding issues, a nearby primary school to include sports pitches in the development and holding a public consultation, plans will be submitted by the end of the month, the council said.

The National Crime Agency (NCA) has released the names of the most wanted, whose crimes range from rape to child abuse and drug trafficking.
The list was published in Madrid as part of Operation Captura.
It includes ex-soldier Shane Walford who was jailed in 2010 for the manslaughter of an off-duty fireman while on leave from the army.
Walford, a former boxer, killed father-of-two Paul Gibbons with a single punch inside a bar in Coventry.
He was jailed for four-and-a-half years but recalled to prison in August 2013 after breaking the terms of his licence.
He has numerous distinctive tattoos including a black panther on his left arm and boxing gloves on his abdomen.
Also on the list is Mohammed Jahangir Alam, 32, who was sentenced to 14 years in his absence in March 2010 for rape and sexual assault.
Bangladeshi Alam arrived in the UK on a temporary visa in October 2007 and moved to Cheltenham the following year, where he sexually abused his victim, the NCA said.
His last known address was in the E3 area of London.
A third fugitive, 52-year-old Carlo Dawson, from Croydon, south London, is wanted on suspicion of indecently assaulting a 12-year-old girl and making indecent photographs of a child. He has a two-inch scar on his right palm.
Hank Cole, the NCA's head of international operations, said: "Spain is not a safe haven for British fugitives. The NCA and its partners will continue to pursue these individuals relentlessly and return them to the UK to face justice.
"The exceptional level of collaboration and intelligence-sharing with the Spanish authorities has been vital to these arrests. However, we still need the support of the public."
Police are also hunting:
Since the launch of Captura in 2006, 65 out of 76 named suspects have been caught.  This is the ninth appeal of its kind.
One of the latest to be found in Tenerife was "drugs lord" Stephen Blundell, 36, from Merseyside, who fled the UK before being sentenced for a Â£1 million heroin plot, the NCA said.

The sign - on the Beeston-bound platform of the Queen's Medical Centre stop - points commuters towards the "Univeristy Of Nottingham".
The error could have been there for "seven to eight months", it is estimated.
A Nottingham Express Transport (NET) spokesman said they will now be looking to replace the sign next week.
People were quick to condemn the "unfortunate error", captured by a BBC journalist.
It follows another spelling mishap spotted on a sign last July on the network, which stated "Chillwell Road" rather than Chilwell Road.
"Absolute joke - what is happening with the world," Melanie Winskill wrote on BBC Radio Nottingham's Facebook page.
Gill Bennett pondered: "Maybe the people responsible didn't go to university."
A NET spokesman said it is unsure how long the error has existed at the stop, but added it "could have been there for seven to eight months".
"Clearly this is an unfortunate error made during the production of the sign," the spokesman said.
"We will be looking to replace it as soon as possible next week now it has been pointed out."
The former home of Stoke City FC is to be redeveloped into 200 homes, a park and fields, the council says.
[NEXT_CONCEPT]
A convicted killer is among 10 of Britain's most wanted fugitives believed to be on the run in Spain.
[NEXT_CONCEPT]
A misspelt sign at a stop on Nottingham's tram network has been branded an "absolute joke".