Legal & General Modular Factory, in Sherburn in Elmet, will use cutting edge technology to manufacture around 3,500 homes each year, that can be transported to various locations and assembled on site.
The company says the modular homes can be built within a few days, have up to 80 per cent fewer defects than traditional brick houses and reduce heating bills by up to 70 per cent.
The new homes will help the Government meet its hugely ambitious target of building 300,000 new homes a year.
Housing minister Esther McVey visited the factory on Thursday as part of the Government’s drive to establish a house building ‘construction corridor’ that runs from Leeds to Liverpool.
She said: “I want the UK to become the world leader in modular homes within the next 10 years, with safety, quality and choice at its heart.
“Homes built using modern methods can be of higher quality, greener and built to last.
“With our emphasis on safety, quality and beauty, the North of England could be the global leader in modern methods of construction.
“This announcement shows Leeds is wasting no time in investing in new technology and getting Britain building.”
Rosie Toogood, chief executive of Legal & General Modular Homes, said: “What we are doing at Legal & General Modular Homes is ground breaking.
“We have taken a high-tech engineering approach to developing our product range, designing and manufacturing homes in a truly innovative way that will transform the way homes are built in the UK.
“We believe Modular Manufacturing is vital to delivering much needed homes, alongside supporting new skilled jobs and productivity growth for the UK.”