The project will develop 253 new homes including 163 two, three and four bed private homes along with 90 affordable homes at Etal Lane.
The scheme is the first to be delivered from the newly created Newcastle Housing delivery Partnership Framework.
The initiative aims to maximise housing output on city council owned sites through the establishment of closer working relationships with house builders and Registered Housing Providers.
Land receipts generated from the schemes will help deliver the council's £25m Future Homes Programme, a key element of the Labour Party’s 2014 Local Election Manifesto – Creating a Fairer City.
The £25m package of measures over the next five years means an increase of better homes in the city to meet the family housing crises.
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The project will also help reduce the number of homes that need to be built on the green belt by 2,000 properties.
Councillor Ged Bell said: "The Etal Lane development provides a wide range of housing choices, and reaffirms the council’s commitment to creating a more inclusive housing offer, bringing investment to the city, and creating jobs for local people. With a mix of private sale and affordable properties, Etal Lane caters for all our local needs, and enables those looking to get a first step on the property ladder a place to do so.
"We look forward to working with Keepmoat and Riverside in delivering more balanced and inclusive communities."
Mark Patchitt, Director of Development and Growth at Riverside ,said: "I think the Etal scheme shows how Riverside is ready to step up to the Devolution Agenda.
"Newcastle has used its own land and money and signed a deal with Riverside and Keepmoat to build new homes in true partnership. If the new Government does devolve funding and power, then Etal Lane is a great blueprint for other cities to follow."
Richard Bass, Homes Regional Managing Director for Keepmoat in the North East added: "We are delighted to be involved with the City Council and Riverside on this innovative partnership that as well as creating 253 new homes will safeguard or create over 100 jobs.
"Keepmoat now has nine housing projects underway in the City creating a total investment of £105m. Many of the schemes include affordable homes for local people and will help deliver the Council’s pledge to create a fairer city."
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