Muir Homes will build a further 22 homes at the development site in Cellardyke.
The works will bring the number of properties at the Silverdykes project to 57 and is due to be completed
Phase two of construction work is almost complete, with the first 14 homes planned for handover at the end of this month.
The Scottish Government also provided a £196,000 contribution towards the projects phase two costs.
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Cllr Judy Hamilton, who recently visited the site, said: "As with the rest of the programme, these new homes will be energy efficient and adapted to suit the needs of their tenants, where needed. Where possible, we'll also be allocating them to existing tenants which means that, in turn, we can free up their old homes for other people and families to benefit from.
"Our Fife-wide Affordable Housing Programme, that will build 2,700 new homes by 2017, is gathering pace with almost half of the homes already built and occupied."
Alastair White, MD of Muir Homes, said: "We are delighted to begin work on our third Fife Council housing development at Anstruther. The previously completed 21 houses and flats were a great success and we have no doubt that the ongoing 14 houses and flats plus the recently started 22 houses and flats will be another example of Fife Council and Muir Homes successfully working in partnership."
(LM/MH)
