Natural England has allocated money to enable councils in the Solent area to restart granting some planning permissions for housebuilding, after this was halted by concerns about nitrate pollution.
Sean Woodward, chair of Partnership for Urban South Hampshire and leader of Fareham Borough Council, told Local Government Lawyer the £2.3m would be used to buy low grade agricultural land where nitrates are needed for growing.
The land would be re-wilded, though might remain in agricultural use for purposes that do not require nitrate fertilisers.
Nitrate pollution arises from both agriculture and residential waste and so the reduced use of the chemicals for farming would allow for some new homes without increasing the overall total.
Runoff from land where nitrates have been used was found to damage habitats in waterways.
Councils in the Solent area said last year that they faced potential planning appeal costs and disruption to local plans because of the nitrates issue.
This followed a European Court of Justice ruling concerning a case in the Netherlands on interpretation of the Habitats Directive.
Natural England said at the time that it had as a result to take a more rigorous line on additional nitrate pollution in the area.
Winchester City Council in July updated its policy on nitrate neutral development to allow it to start collecting off-site financial contributions towards mitigation solutions.
The council said high levels of nitrogen from human activity and agricultural sources in the catchment had caused excessive growth of green algae, which damaged protected habitats and bird species.