Approximately 54 units of key worker housing have been proposed for the former CI Tyres site in St Peter Port.
Previously, the expectation was that 25 units would be included in the new development at Domaine des Moulins.
However, the States of Guernsey - along with the Guernsey Housing Association - are proposing more than double that amount to provide much-needed key worker housing.
These revised plans will delay the completion of the build by 12 months, with the estimated date now early 2026.
Chief Executive of Guernsey Housing Association, Vic Slade, says: "There is currently huge pressure to provide more affordable housing, so it makes sense to maximise use of the space on the site to provide as many homes as we can, whilst making sure that we protect design and space standards.
"We recognise the urgent need to deliver this much needed key worker accommodation, so we’re pursuing the revised development as a top priority."
President of the Committee for Employment & Social Security, Deputy Peter Roffey, said: "Having supported the purchase of this site last year, to help address the severe shortage in key worker housing that we’re experiencing, I’m really pleased that there is the potential to more than double the number of homes that this site can provide.
"This decision was a no brainer, as it also delivers better value for money for the States."