The funding has been added to the Affordable Housing Supply budget.
Dundee’s allocation for the next three years is now £6.1m.
Jimmy Black, convener of Dundee City Council’s housing committee, said: "This is very good news for the city especially because the money has been earmarked for projects that we have wanted to do but as yet not had the money for.
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"It means in the first instance that we will again be able to partner with Home Scotland, this time to build all of the 28 new homes in Whitfield Loan that we had originally wanted.
"Officers in the housing department are already working on plans that will be brought forward as soon as possible, and if they are agreed they will be added to our current crop of 142 new rented homes being built or completed since the start of 2011."
The funding comes as the construction of new build social housing gets underway at Mill o’ Mains, Ardler and Ann Street.
The additional money was worked out using a needs-based formula recommended by a joint Scottish Government/COSLA working group.
The funding has now been signed off by both bodies.
It was based on factors including market pressure/affordability, regeneration and deprivation, remoteness and homelessness pressure.
(IT)
