The redevelopment of Pendleton will involve the construction of 1,600 new homes and the refurbishment of a further 1,200 existing tower block homes under the Private Finance Initiative (PFI).
The council has chosen SP+ consortium, led by Together Housing Group member Chevin Housing Association Ltd, as its development partner after a four year competitive tender process.
As well as housing, the scheme will also provide new sports pitches, green space, walk ways and cycle paths. Pendleton is a link between Salford Quays and Manchester city centre.
The SP+ consortium is expected to submit a full planning application in the summer, with work set to begin later in the year.
Councillor Gena Merrett, lead member for housing and environment at Salford City Council, said: "This is an incredibly exciting and much anticipated regeneration scheme for the area. The plans put forward by the preferred bidder not only build new housing, they will also make the most of what is already there, refurbishing some of the existing properties and creating parks and green space that will create a much nicer environment for local residents to enjoy.
"It has taken many years to get to the stage where we are ready to start the scheme, but it is so important we get a scheme like this right as it has major implications for the community. Good housing and facilities can make a big difference to a community, having a positive impact on everything from health and wellbeing to crime and disorder. I am pleased to see this scheme coming forward, and that the community has had such a big impact on shaping it."