The council has formed a consortium with the two companies, called Sheffield Housing Company, 50% owned by the council.
The aim is to regenerate neighbourhoods across the city.
Councillor Penny Baker, Sheffield City Council's cabinet member for housing, regeneration and planning, said: "This will be a 50:50 partnership between the council and the private sector in order to provide new high quality homes for sale, shared ownership and rent. These homes will be built in areas where regeneration is needed most, and will have the added effect of stimulating the local economies with labour initiatives, training schemes and support for small, medium and community enterprises."
Keepmoat partnerships director Eugien Jaruga said: "It is testament to the commitment of all those involved that, despite the challenges of recent years, we have worked together and with great determination to get this much needed project to the point where delivery can soon begin."
Homes and Communities Agency area manager Kate Reid said: "The confirmation of a private sector partner is excellent news. We are really pleased that we can now help make best use of local land to meet long term local housing needs through the Housing Company."
"The fact that Keepmoat and Great Places will be working together will create the flexibility to provide the right homes in a way that people can afford over the next 15 years."
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