Ogilvie Construction Ltd was awarded the contract following a competitive tendering process at a meeting of the council's Council's Cabinet on 10 November.
Construction is expected to begin on the eight one-bedroom flats in early Spring 2010 and will take around nine months to complete.
Cabinet member for Housing Councillor Stuart Currie said: "The construction industry is operating in a tough economic climate. This means that the tenders we're receiving are very competitive as contractors are keen to be working to secure employment for their workforce.
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"The site is relatively small parcel of land but is in a central location in Prestonpans making it perfect for flats like this. It's a grassy area bordered by existing council houses and a playing field, and has been sitting vacant. Meanwhile we've got 558 people waiting for a one-bedroom council property in the area."
East Lothian Council has 1352 properties in Prestonpans, having lost approximately 1045 homes under Right to Buy. A total of 1042 people are awaiting a council house in the area.
Councillor Currie added: "The flats will help to meet this demand as part of our overall commitment to building more affordable houses in the county. In isolation this project may seem small but it's one of many across the county that will deliver our target of 1000 new homes over the next five years."
(GK/BMcC)
