It will be the first council homes to be built in the town for 17 years.
A total of 29 flats are being constructed at Abbey Walk, and will consist of 22 two-bedroom and seven three-bedroom homes.
The project will cost £3.2m, with the Scottish Government also providing £29,000 of funding.
Councillor Judy Hamilton, Fife Council's Executive Spokesperson for Housing and Building Services, said: "It's good to see work underway today on what will be the first new council houses for St Andrews in a number of years. This is a very welcome development that will be ready to receive tenants in September next year.
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"Our new properties are always allocated to existing tenants, where possible, such as those looking to downsize or a family that needs more bedrooms. This means that we can offer the vacated homes to other families on the housing list too."
She added: "This development is an important milestone in the Council's affordable housing programme to increase the number of affordable homes for rent across Fife. The programme is making good progress towards our commitment to deliver 2,700 new homes by 2017 and St Andrews is an area of high demand with very low turnover."
Stewart Shearer, Director of Robertson Partnership Homes, commented: "Robertson Partnership Homes is pleased to bring a variety of high quality affordable housing to help meet demand for affordable rental accommodation in St Andrews, in partnership with Fife Council.
"Developments such as Abbey Walk play an important role in sustaining the social and economic well-being of local communities such as St. Andrews."
(JP/CD)
