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Councillors have backed plans for 33 new affordable flats and a retail unit in Penallta.
The new homes will be built in three blocks on land at Winding Wheel Lane, and will each have their own parking space.
Members of Caerphilly County Borough Council’s planning committee heard how applicant Bluefield Land Ltd also proposed building a single retail unit next to the homes, which could then be divided into two separate businesses.
The case officer, Anthony Pyne, told the committee the land was previously developed but was “not considered to have fully assimilated into the landscape”.

The homes will be near former industrial heritage sites but a council conservation officer had not objected to the plans, he added.
The committee heard the application drew four letters during a recent public consultation.
These included two objectors who raised concerns about the amount of parking provided, and reservations that the retail unit could attract antisocial behaviour if it was left vacant for a period of time.
Mr Pyne said the council’s highways officer had not objected to the plans, adding there was one space for each of the new flats and there would be a separate parking area for the retail unit.
He said keeping that unit secure would be the developer’s responsibility, but added the presence of the new homes nearby was “likely to provide natural surveillance”.
Mr Pyne also said the council had received two letters of support for the application.
The committee agreed unanimously to approve the plans, subject to the signing of a Section 106 agreement that guarantees affordable housing will be provided.
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