Cherwell District Council has just approved detailed plans submitted by developer P3Eco and housing association A2Dominion for an initial 393-home mixed-use zero carbon village, known as the Exemplar.
The decision will help to unlock £6m in Homes and Communities Agency funding needed to help deliver 119 affordable homes as part of this phase of development.
The resolutions to grant permission are subject to completion of a legal agreement.
NW Bicester Eco Development will be one of the biggest housing developments constructed to Level 5 of the Code for Sustainable Homes in the UK so far.
This exceeds the new standards set by the Government for housing in the designated eco-towns.
Each house will have high standards of water efficiency, exceptional levels of insulation in walls, windows and roofs and make use of photovoltaic panels and district heating systems.
Councillors also decided to grant outline permission for an eco-pub, community centre, retail units, an eco-business centre and a site for a future primary school.