The 70-unit development will redevelop the former 6.75-acre site of the Lancashire Watch Company on Albany Road.
The Grade II listed factory building will be converted into 54 extra care apartments while an additional 16 extra care bungalows will be built on site.
Harbur is building the properties on behalf of Liverpool-based developer Iliad Group for Knowsley Housing Trust (KHT), which will make the homes available for affordable rent and shared ownership.
Harbur Construction managing director Christian Bury said: “The one- and two-bedroom apartments will transform the historical site into a thriving community in an area where demand for this type of housing is high. The new homes are being built in keeping with the site’s rich heritage while providing modern living facilities to help elderly and disabled people live independently.”
KHT secured funding from the Department of Health for the scheme, which meets the government’s Code for Sustainable Homes Level 3 and is being built to Lifetime Homes standards.
Manchester-based Formroom Architects has designed the scheme which is part of a two-phase masterplan to revitalise the area. There are plans for a further 62 residential properties to be built on site as a second phase.
Based on Albany Road, the site was the former home of the Lancashire Watch Company which closed its doors in 1910.
The new development is expected to be completed by April 2016.