The former Stowheath Day Training Centre, in Stowheath Lane, is being pulled down by DSM Demolition ahead of the brownfield land undergoing mineshaft treatment works to make it ready for development.
Funding for the remediation works has been secured from UK Government through the Brownfield Land Release Fund and Land and Property Investment Fund.
It will enable the sale of the land to a proposed development partner for the delivery of 39 new energy efficient homes by modern methods of construction.
The designs will be informed by feedback from previous consultation with local residents and will be subject to planning approval.
The council’s Cabinet Member for City Development, Jobs and Skills, Councillor Chris Burden, said: “It is important the council makes the most of its assets and these demolition and clearance works will pave the way for us put this derelict site back into meaningful use for the local community.
“It will enable the development of new and better affordable homes for key workers in this part of the city.
“The most important thing is to bring derelict brownfield sites like this back into use for much needed housing in our city rather than leave them disused.”