The former John Brown's shipyard, one of Scotland's most famous post-industrial sites, is to become a new housing development following a £15.62m breakthrough deal, the Sunday Herald can reveal.

Owned since 2004 by private company Clydeside Regeneration, all but a corner of the 90-acre site in Clydebank, birthplace of some of the world's greatest ships including the QE2, the Queen Mary and HMS Hood, has been wasteland for a decade and a half. The last ship was built there in 1972 and the yard was subsequently used to build oil rig platforms until the gates were padlocked for the last time in 2001.

The long property slump heightened the challenge of finding a use for a vast brownfield space in an economically depressed area. Although promoted for a decade by the public-private Clydebank Urban Regeneration Company, which spent £16m on clearing and decontamination, developers shunned the investment required to make the site ready for building.

Signed last week, the deal will see essential infrastructure and ground works put in place by West Dunbartonshire Council, paving the way for an expected £250million of private money to create a "bustling community hub", a "showpiece" development of 1,000 new homes (including 200 social homes), a retail unit, hotel, care home and a health centre. The emerging masterplan, expected to comprise 10 separate land packages, will be known as Queens Quay.

The deal, described by one council source as "imaginative but realistic" comes less than two years after the appointment of the council's infrastructure and regeneration director Richard Cairns, formerly head of infrastructure at the audit and consultancy firm Mazars. It involves the council funding the repair of quay walls and the creation of a new road layout, in the expectation of recouping investment from a share of any future land sales, as well as the economic benefits of repopulating Clydebank.

Work is expected to start early in 2016, with the road infrastructure and site-enabling work being completed by summer 2017 and the remaining works by early 2018.

The new publicly-funded infrastructure will allow the private owners to advance their masterplan, which includes proposals to build over 1,000 new homes, a local retail unit, pub-diner, hotel, and new public space with a new "boulevard" leading from Clydebank town centre and transport interchange to the riverside.

Council economic planners expect the development to generate £5.5m locally each year, with a further £2.9m created nationally. It is expected to provide over 2,000 short-term construction jobs, support over 50 apprenticeships and promote construction work worth an estimated £250m. Significantly, given the long-term depopulation of West Dunbartonsire, it is expected to attract an additional population of over 2,000 people.

The plans will complement the major developments that have already taken place on the Queens Quay site, previously under the control of the Clydebank Urban Regeneration Company. These include the development of West College Scotland, the opening of the Titan Crane visitor attraction and Titan Enterprise Business Centre, the creation of Aurora House Council office, and the new £22m Clydebank Leisure Centre started construction last month.

The council is already planning a new £19 million Clydebank Health Centre funded by the Scottish Government and a new £10m Clydebank Care Home.

Patrick McGlinchey, the council's convener for infrastructure and regeneration, said: "This is the biggest and most influential project the council has ever been involved in as we look to transform the former John Brown's yard into a bustling community hub. To see over 1,000 new homes built at this stunning location overlooking the Clyde will help to drive population growth and bring a number of economic benefits."

Council Leader Martin Rooney said: "For too long our once proud shipyard has been a derelict site at the heart of Clydebank, but that is all about to change. We've shown clear leadership in driving forward this landmark deal to create a once in a generation opportunity for regenerating the town."

"The potential benefits are huge and a great deal of thanks must go to the council officers for their hard work in getting us to this stage and to our private sector partners for working with us to make this happen. We need to keep the momentum going and my focus will be on working with the Scottish Government to secure partnership funding to support the social housing element of the development plans."

Duncan Graham, of Clydeside Regeneration, said: "Having been involved in many large scale projects over the years, I believe that the way the council has approached the regeneration of such an iconic site should be held up as an example of how to approach this type of project. By the council committing this money it will allow us to push ahead with the major development plans for the site."

Formed in 2001 by a group of Scots businessmen in order to acquire the John Brown site, Clydeside Regeneration comprises directors of haulage company Wm Hamilton & Sons Ltd, demolition company Central Demolition Ltd and brick makers Raeburn Brick.