The funding injection will bring hundreds of new homes to the stalled Festival Gardens site.
Liverpool City Council will receive the grant from the £450m local authority accelerated construction programme and allow remediation work to take place on the site.
To date, a lack of funding has meant that such work has not been carried out.
With the new cash injection, the first homes are expected to be available by 2022.
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Edward Lister, chairman at Homes England, said: “We are determined to use all the resources available to us to make homes happen across England, so I’m thrilled our funding means work can move forward rapidly at this historic site, providing homes for hundreds of families.
“And with Homes England and combined authority experts now working side by side, we expect to further accelerate the construction of new houses across the region.”
Kit Malthouse, minister of state for housing, added: “Delivering the homes Liverpool needs is a crucial element of our plan to build a successful and vibrant Northern Powerhouse.
“I was born and brought up in Liverpool and went to the original garden festival as a child, so I know how much this investment will regenerate a key area of this great city, transforming Festival Gardens site with desperately needed family homes.”