A site allocated for business use near Broughton could house up to 150 new homes instead.
The land at Atterbury is no longer considered suitable for employment use because there are now too many houses around it.
Now Milton Keynes councillors will consider a development brief to transform it into a “high quality neighbourhood with a wider variety of housing types and tenures.”
This could include a proportion of self or custom build opportunities, say officers.
The site, which is owned by Milton Keynes Development Partnership, lies between the H6 Childs Way and the V11 Tongwell Street.
Milton Keynes Village and Middleton are to the south and Broughton to the north, while Broughton Local Centre is just 200 metres away.
Officers say the density of the proposed housing will be revealed when the development brief goes out to consultation at a later stage.
Buy already some people are not happy.
Ward councillor Sam Crooks (Lib Dem) said: “Many people have nothing against another housing development but they are worried that the local schools and health facilities will not be able to cope with another influx of residents.
“Already the GP surgeries and all the schools in the surrounding areas are full to capacity.
“I am asking that we delay this plan six months while we look into providing this very necessary infrastructure.”