Hemel Hempstead has been officially designated a growth area with 12,000 new homes to be built by 2021.
A green belt review will take place to find room for the extra houses while £6.5million has been set aside to pay for new infrastructure and support services.
The controversial plans have been in the pipeline for some time but now the government h
as given them the seal of approval.
On Monday the East of England Plan was published, which pulls together issues like housing, transport, the environment and waste.
There will be 83,200 new homes in Hertfordshire by 2021 and there are plans for 68,000 new jobs.
The government has also said where there are incursions into the green belt this will be balanced by extensions to the belt in other areas, resulting in a net increase.
Minister for the East of England Barbara Follett said: "For some people the projected housing of 12,000 causes worry.
"But this is brownfield development on the edge of Hemel Hempstead. Extension of Hemel Hempstead into the district of St Albans will probably be necessary.
"It will be necessary to have a green belt review.
"I can imagine this will be quite controversial."
Ms Follett said new towns like Hemel Hempstead needed a 'face-lift' and more homes were crucial to solving the housing shortfall.
"These towns surrounding London, there are huge housing shortages," she said.
"We have to make sure these new towns are not only sustainable and have the correct infrastructure, but are also nice places where people want to live.
"They are very middle-aged, these new towns, and they need a face-lift.
"What we're trying to do is get a feel of success and growth so people come in and invest."
However, Herts County Council has reacted with anger to the plans.
Leader Robert Gordon said: "We are furious that the government has again failed to listen to local concerns about the impact of these housing numbers.
"We accept that some additional homes are needed, particularly to help key workers who struggle to afford house prices in Hertfordshire.
"But the numbers in the plan are approaching double what we, as local representatives, feel the county can accommodate on this timescale."
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