The North East council will begin with seven homes in Dunston and a further 14 in Winlaton and Blaydon. Construction is expected to start in early 2018.
The council has also agreed a 36-home development on its former Lyndhurst School site with its wholly owned Gateshead Trading Company, with some 15% of these classed as affordable homes.
A spokesperson said the council would develop homes itself on small sites, but 19 larger ones would be built by its joint venture with social landlord Home Group and house builder Galliford Try.
It hopes to build 11,000 new homes in all by 2030.
Malcolm Brain, cabinet member for housing, said: “To commit ourselves to delivering our first new council homes in almost 30 years is an exciting step, and an important one in helping to meet our area’s demand for housing.
“It’s clear that we can’t rely solely on the private sector to deliver what’s needed. We need to tackle this problem ourselves.”