Planning applications to build 1,000 new homes on the site of the former Hickson and Welch chemical plant could be submitted by August.
Chancellor George Osborne announced the Castleford site as part of a designated housing zone during his budget earlier this month.
Developer Castleford Energy Village now hopes to gain permission from the Environment Agency to carry out remediation work on the site.
David Frohnsdorff, the company’s manager and shareholder, said: “Getting the housing zone status is great news and we are well on track towards getting houses built on the site.
“It’s taken six months to get to this stage so it’s an important step.
“We’re currently working on a big project in Blackburn that’s due to be complete in May, then the planning application for the Castleford scheme will follow around August.”
A housing zone is an area of land where the government provides funding for infrastructure, site acquisition and leaseholder buyouts.
The Castleford zone covers 12 potential housing sites along the River Aire Growth Corridor including the former Lambson chemical plant site.
Subject to all planned developments being granted planning permission, the corridor could see more than 4,000 homes built in Castleford.
Castleford Coun Denise Jeffery, who is also cabinet member for economic, growth and skills, said: “I am thrilled with the news that our bid for a housing zone in Castleford has been accepted.
“This will bring much-needed regeneration to the Castleford area.
The council and Castleford Energy Village are also hoping to secure an £8m grant from the government for remediation works at the site.