Murdoch Projects, which is the joint developer with Barrington Homes, appealed Wollongong City Council's refusal of the development application for the masterplanned site at Byamee Street in 2017.

The 'Park Lane' estate will include 190 homes made up of 12 townhouses and 178 apartments. The estate will include open space, a road network and a communal garden for residents.

There will also be 31 affordable houses available to rent.

Read more: New apartment building plan for long-vacant Dapto school site

The developers and council were able to resolve the design concerns through Land and Environment Court negotiations rather than a court decision.

Murdoch Projects director Nick Murdoch said he was pleased to be able to move on from the "lengthy process".

"At the end of the day we reached an agreement through the court process," he said. "There were a lot of amendments and changes and that has meant a better urban design outcome for the estate."

The new design will see 12 townhouses as opposed to the original 32 proposed but there are now six apartment buildings rather than four.

The maximum building height has also been restricted from six to four storeys.

"Overall the yield of houses remains unchanged," Mr Murdoch said.

The former Department of Education site is almost two hectares and is located between Dapto Showground and Dapto Mall.

The site is owned by the Housing Trust and Mr Murdoch said a main feature of the development would be affordable and mixed housing.

"Dapto has an extreme lack of housing diversity," Mr Murdoch said. "Something like 83 per cent of houses there are traditional house and land sites.

"We want to make sure the range of housing available in Dapto adapts to the changing needs of the community," he said.

A large fig tree will be the centrepiece of the park with dozens more trees planted along Byamee Street and other new streets within the estate.

Mr Murdoch said the masterplanned design had now been signed off but each building would require a development application to be approved by council.

He said earthworks on the site could now begin and the apartments and houses would be built in stages over the next five years.

"I'm looking forward to delivering well designed, sustainable, quality apartments in a masterplan setting for the community of Dapto," he said.

"Close to shops, public transport, and with the Illawarra on its doorstep, Dapto is the perfect home for this project."

Dapto Public School moved off the land and into a new space at Hosley in 2004.

A year later the council approved demolition of the old school buildings and the site was sold to the Illawarra Community Housing Trust in 2009.

In 2010, a $25 million housing trust development for 108 affordable rental flats across three buildings was approved by the Joint Regional Planning Panel.

This development, funded through a federal government rental affordability scheme at the time, was slated to be part of the solution to the Illawarra's housing affordability crisis.

However, after this approval the trust sought alternatives for the redevelopment of the site.

In 2016, Murdoch Projects proposed a new concept plan, which has now been amended.