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A 250-home development has been granted fast-track approval near Wānaka.
An application for the Mt Iron Junction Housing Scheme was lodged in February, including plans for a childcare centre and two recreational reserves on the Wānaka-Luggate Highway.
Thirteen of the new homes have been earmarked for the Queenstown Lakes Community Housing Trust for affordable housing.
Infrastructure Minister Chris Bishop said it would provide a range of housing to help meet significant demand in the area.
"As well as providing much-needed additional housing, the project is predicted to contribute $86 million to the local economy, supporting jobs both during construction and once the development is complete," he said.
"The panel also accepted the applicant's proposal to limit visitor accommodation to 20 per cent of the development, with those properties able to be used for short-term stays for no more than 120 nights a year.
"This will help ensure these are primarily homes for people to live in, rather than holiday accommodation."
The houses were expected to be built over 10 years across five stages.
Locals had raised concerns about the wildfire risk in the area, including how close future residents might be to susceptible land, the ability to safely evacuate residents and the adequacy of firefighting water supply.
In its decision, the fast-track panel acknowledged the concerns, but said it was satisfied the wildfire risk could be appropriately managed.
That was possible through the combination of subdivision design, access arrangements, defensible space, vegetation management, firefighting water supply, emergency response planning and imposed conditions, the panel said.
"While wildfire risk cannot be entirely eliminated, we are satisfied that the proposed mitigation measures appropriately reduce the risk to future residents and property and provide a suitable framework for ongoing management of that hazard."
Locals also flagged concerns about worsening traffic congestion at the roundabout of State Highway 6, State Highway 84, Riverbank Road and Junction Road.
The NZ Transport Agency flagged that the development would consume available capacity of the roundabout and would bring forward the need for future improvements.
The panel said the applicant volunteered a financial contribution to the agency towards the future costs, which the agency said it would be unable to receive.
During the decision process, the government flagged it was considering changes to the development contributions system to enable councils to recover more costs from fast-tracked developments.
But the panel said no commenter had raised any development contribution concerns, apart from the Transport Agency, so it did not consider the matter any further.
The Mt Iron Junction Housing Scheme was the 35th project approved through the fast-track process.
