Glasgow’s planning committee ruled in favour of the plans, which have been changed following initial concerns over the design of the homes.
Bellway Homes will develop the brownfield site at Bilsland Drive, retaining the A-listed water tower as a “central feature”.
They will need to get future approval from the committee over the location of food growing and sports space either on site or nearby.
A council officer told the committee how changes to the original plans had been “secured through quite extensive negotiation”, including a “pocket park” near the water tower.
She said the water tower had originally been situated on “essentially a roundabout” and added “different housing types” have been introduced to give the development “a different character”.
The officer added: “The one concern that we’ve got is the level of car parking, normally we’d want 100 per cent car parking for the residents and 25 per cent for visitors.
“In this case, we’ve got 160 per cent car parking which is considered really excessive. We’d like that cut down to 125 per cent.”
There had been concerns raised over the lack of social housing, but the council officer said there was no requirement for any to be provided.
She said the council’s planning department is “very supportive” of the plan as it brings “a brownfield site back into active use, creating necessary housing for this area”.
Councillor Eva Bolander asked for the condition on the reduction in car parking to be strengthened, which the committee agreed.
A finalised layout of car parking will need to be provided before work can start and, where parking is removed, landscaping will need to be provided.
A financial contribution, totalling almost £448,000, is required to compensate for the lack of formal sports space.
Bailie Dr Martin Bartos said: “Despite my great pleasure in seeing what the developers have done, in terms of the open space, I am left thinking that there might still be something which might be done which can make this an even better development.
“I do wonder whether or not we should be accepting this in quite the form it is, although I welcome it in general principle.”
An amendment put forward by Cllr Bartos added a condition which requires the planning committee to agree to how the financial contribution is used and where sports space — and food growing areas — are provided.
There were 18 objections to the application, but local Labour councillors Gary Gray and Robert Mooney were supportive.
SNP MSP Bob Doris submitted a neutral comment, supporting the development of the site but raising concerns over the potential for a “rat run” due to the access from Panmure Street. He also asked for affordable housing to be considered.
Bellway will build 243 houses and 160 flats, across 10 blocks, on the site, and plan to repair and retain C-listed stairs.
A council report stated a “more bespoke design code has been adopted using predominantly red brick, making reference to the red stone buildings previously occupying the site”.
Ruchill Hospital opened in 1900 as an infectious diseases hospital and was absorbed into the NHS in the 1940s. It was closed in 1998 and bought by Scottish Enterprise in 1999. The land was then sold to Bellway Homes.