Work is taking place on the first phase of the development which will involve building 200 homes at the site of the old British Sugar premises near Allscott on the northern edge of Telford.
The new development, known as Allscott Meads, will include two, three, four and five-bedroom houses plus bungalows.
Developer SJ Roberts Homes Ltd secured reserved matters planning permission earlier this year.
Once the first phase is finished, the developer plans to build another 270 homes on the site, as well as a new primary school.
The whole site is expected to be completed by 2027.
Mike Sambrook, managing director of Welshpool-based SJ Roberts, said: “Work is progressing very well.
"We had to stop work for three to four weeks because of Covid.
"We have put measures in place to keep everyone safe.
"We are doing temperature testing on everyone now at the start of each day.
"Visitors coming to the site will also have the same treatment.
"We are achieving social distancing where necessary and have put signage up around the site. We have taken it extremely seriously."
Mr Sambrook said the first completed homes were expected to welcome residents early next year.
The homes, which he said will be of high quality, are going to open in phases.
"We are looking at the first occupancy being January or February 2021," he said.
"We have started to release some properties so people can make early reservations.
"The whole building programme takes us through to 2026/27.
"The first phase is 200 homes. Then the remaining 270 we will be starting probably in three years time.
"We have outline planning but we will do a reserved matters application for the remaining 270."
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The developer has promised to respect the needs of wildlife in what is a largely rural location.
SJ Roberts Homes will be planting an additional 500 trees, 1,000 metres of new hedgerows and 2,500 “bee-friendly” shrubs, with further plans in place to attract wildlife back to the area upon completion of the site.
The new site will cover about 67 acres in total beside the B4394 between Allscott and Walcot villages.
Along this stretch the road is due to get a 30mph limit. There are also plans for an ecology park.
The factory closed in autumn 2007 after 80 years of business.
At its peak the plant processed 6,000 tons of sugar beet each day.
As most of the existing buildings on the site were not suitable for alternative use, the majority of the factory was demolished and cleared over the next two years.