Boston Borough Council has given outline planning permission for 41 homes on the site of a plant nursery in Swineshead.
Applicant Woods Nurseries submitted the proposals for the new homes on Tarry Hill in the village.
A full mix of house types is proposed, ranging from bungalows to detached and semi-detached homes and townhouses.
Open market and affordable housing could both be included as part of the development, and public open spaces would be provided.
Access to the development would be from a new road and footpath off High Street.
This would also provide access for vehicles and pedestrians to a proposed new convenience store.
A report supporting the application said the nursery will cease trading soon, leaving the site vacant.
The report by Rollinson Planning Consultancy said: “These retailers no longer offer contracts to supply and this lack of commitment and security business is the single most crucial factor in determining the ongoing viability of the business.
“In addition, downward price pressure, national living wage and auto enrolment pension obligations mean that there is no medium to long term future for the business.
“The infrastructure of the nursery is old and outdated, making automation and economies of scale impossible to achieve.
“The company will cease trading soon, leaving the site vacant.”
The council’s Planning Committee unanimously voted in October 2017 to delegate authority to Interim Development Control Manager Simon Rowberry to grant outline planning permission.
A decision to grant permission was published in a notice on April 18.
Details of appearance, layout, landscaping and scale of development will have to be submitted and considered by the council at a later date.