The cash is to be provided by Redrow Homes, who will soon begin the first phase of a 380-home estate to the east of Fleetwood docks.
Wyre Council demands larger housing projects should include 40 per cent affordable housing.
But the cost of making the docks site suitable for building have made that target prohibitive for Redrow.
So to get round the problem, the developer has agreed a lower percentage with Wyre Council for the docks site – and the big cash payment to provide affordable housing elsewhere.
Now council officers are working on ideas as to how the money should be used.
They will come up with options of using the money on the docks site, off-site, or a mixture of both.
Wyre's living healthily portfolio holder, Coun Lynne Bowen, said: "We are waiting for a report from the housing section and the planning department.
"It was discussed two weeks ago and I was told it would be a priority."
Redrow is spending in the region of £5m on a land-improvement project at the site, which involves using material dredged from the River Wyre to raise the level of the land.