The 65 properties, planned for the former Blessed Hugh More School site, would be for people on the South Kesteven District Council housing register - those who most urgently need a home.
Cabinet Member for Housing and Planning, Cllr Robert Reid, said: "Social housing is needed across the country and a development like this would help SKDC meet its housing priorities.
"There would be a mix of house types and sizes built to the Lifetime Homes Standard, which will support residents' needs now and into the future.
"This proposal is sensitive to the surrounding area, with new homes no closer than 21 metres from existing properties. It would include public green spaces, improved pedestrian routes and footpaths to nearby countryside."
It is being considered as part of the council's Housing Strategy to meet the needs of residents, supply new housing for a range of tenants and tenancies, and provide good quality, sustainable and secure living, in an environment where people can thrive and achieve.
The consultation will close on 5 July. SKDC will assess any changes that may need to be made before finalising the proposal and submitting a planning application. The normal planning procedure will allow further comments.
Notes for editors:
Comments can be submitted online at https://blessedhughmoresite.commonplace.is
Anyone unable to access the survey and information online can obtain all details by contacting the SKDC development team on 01476 406080 or BHMDevelopment@southkesteven.gov.uk
The 2.8-hectare site lies east of Grantham Town Centre and is bounded by Rosetti Court, Tennyson Avenue, Burns Close, Windsor Drive, Scotney Drive and Sandringham Drive.