The new apartment complex will be built at the lower end of Waterloo Street.
Nineteen apartments for people over the age of 55 are to be built in Derry's city centre.
The apartments will be built over businesses currently occupying numbers 50 to 54 Waterloo Street at the lower end of the street.
The complex, which will be built by Clanmill Housing Association, will be made up of 14 one-bedroom apartments and five two-bedroom apartments.
Planning permission for the apartments was granted in April 2017.
However, local Sinn Fein councillor Patricia Logue said the construction had been held up because of the COVID-19 pandemic.
She said the new housing units in Waterloo Street will be for the over-55s.
“It's good news that plans to build nineteen new social homes at lower Waterloo Street are to proceed," she said.
“The new build will comprise of 14x 2 person/1-bedroom apartments, and 5x 3 person/2-bedroom apartments. All apartments will be for the active over-55 age group.
“Increasingly we all are looking at ways of breathing new life into parts of our towns and city centres and provide much needed accommodation.
“It is hoped that the new homes will be ready for tenants by the Spring of 2022."
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