Winchester civic chiefs have agreed to spend £900,000 on nitrate mitigation and break a development logjam.
The city council wants to spend the money on upgrades at four of its sewage plants in the rural district.
The work will reduce nitrates and phosphates going into watercourses and reducing water quality and biodiversity in rivers such as the Itchen and Test and also The Solent.
As a result the council will be able to sell credits to private developers, freeing them to build 183 homes across 37 schemes that had been put on hold..
Similar work has already been done at council sewage plants at The Goodens in Cheriton and Northington.
Green councillor Danny Lee told the full Council meeting that nitrate pollution comes not just from households but also from farming with chemical run-off into streams and rivers, poorly-maintained private water treatment plants in places not on mains drainage and by water companies.
Cllr Jackie Porter said: "This is good news because it will reduce nitrates going into The Solent. The farming community has over the years reduced nitrate use considerably."
The investment has cross-party support and was agreed unanimously.
The money has come via the Partnership for South Hampshire (PfSH), which brings local councils and other partners together with a focus on sustainable growth.
It secured £9.6m of government funding which will be used for a range of schemes led by individual councils across the region. The funding was awarded in spring 2024 and came from the Ministry for Housing, Communities and Local Government's Local Nutrient Mitigation Fund to support projects to protect the local environment.
A total of £900,000 of this funding has been allocated to Winchester City Council.
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