They form part of South Kesteven District Council's £30m commitment over the next five years to deliver good quality social housing across the district.
Ten modular one-bedroom units for Kinoulton Court will be built away from the town, delivered to the site by lorry and lifted into place using a crane.
The modular format creates energy-efficient new homes that minimise carbon emissions and have
lifetime home features making them fully accessible and easily adaptable for additional needs at minimal cost.
Cabinet Member for Housing, Cllr Barry Dobson, said: "Along with our other social housing projects under way in Bourne, Stamford and Grantham, these projects are designed to bring much-needed affordable housing to the people who really need it.
"We are committed to creating a better quality of life for our residents and this work forms part of our journey to make South Kesteven a place where people want to live, work and invest.
"Affordable housing is one of the key building blocks in ensuring that all of our towns are attractive to residents, visitors and businesses alike.
"Investment and innovation, along with wider regeneration, are key to our vision for the future of this district."
The development will be a valuable addition to SKDC's social housing supply and will help to meet demand. It follows a similar project for four homes at Earlesfield Lane, Grantham, approved earlier this year.
Plans were approved for the homes at Kinoulton Court, south of Hornsby Road, Grantham, by SKDC's planning committee on Wednesday 26 June.