Work has started on building nine council flats and three council houses in the centre of Brighton.
The scheme is under way in Kensington Street, in the North Laine area of Brighton, along a stretch of road known as “graffiti alley”.
The £2 million scheme is filling in three pockets of land owned by Brighton and Hove City Council.
The bays were once used as parking spaces for staff at the Argus newspaper when it was known as the Evening Argus.
In their place, the council is building a two-bedroom house and 11 one-bedroom homes, including a wheelchair-accessible flat.
All of the properties – being built as part of the council’s New Homes for Neighbourhoods programme – will be rented to people on the council’s housing register.
The first tenants are expected to move in next year – two years behind the date envisaged when the scheme was approved by councillors in January 2014.
At that stage, councillors were told that rents would be £151 a week for one-bedroom properties and £190 for the two-bedroom house.
Councillor Anne Meadows, who chairs the council’s Housing and New Homes Committee, said: “It’s great to see work getting under way on more new homes for rent.
“Developments like this one in Kensington Street are making the best possible use of small sites to provide more housing.
“The construction site is in the heart of the community and we are working with local residents to keep them informed and minimise any disruption.”
The council said: “The sites have been popular with street artists – and photographs of graffiti on neighbouring walls will be on display at Jubilee Library in Brighton from (Monday) 19 March for a week.
“The photographs will then be moved to The Keep archives and historical resources centre to provide a permanent record.”
The council added that 131 new council homes are due to have been completed as part of the New Homes for Neighbourhoods programme during the current financial year.
They include the 57 flats at Kite Place, in Whitehawk, 29 flats at Hobby Place, in Whitehawk, and the 45 extra care flats at Brooke Mead, in Albion Street, Brighton.