In January 2010 Durham County Council in partnership with Dale & Valley Homes and Keepmoat were awarded funding to develop new homes at Greenside Place and Park Avenue Close in Crook.
The developments will be the largest council house building scheme in the North East in almost two decades.
Over recent years the existing sheltered housing schemes have become dated and have proved to be impossible to adapt for customers who may require wheelchair access. Also many of the flats are small and do not provide modern facilities for residents.
The new developments will be 46 appartments and four bungalows at Park Avenue Close and 17 houses at Greenside Place.
Councillor Clive Robson, Cabinet Member for Housing at Durham County Council, said: "I am delighted that the government has allocated the Council an additional £3.5m to enable us to build 67 new homes in Crook, County Durham.
"This funding will enable us to provide much needed new family homes as well as flats and bungalows to replace outdated sheltered accommodation for older people as part of an overall funding package of £8.5m. "