91 homes could be built on the Fontaine Vinery. They would be a mix of social housing, first time buyers' homes and keyworker housing for health staff.
The Guernsey Housing Association says its plans will use the States-owned land to tackle the 'pressing need' for more homes in the bailiwick.
It wants to build one-bedroom apartments, as well as two, three and four-bedroom houses.
All the homes would be offered to local residents, especially those already living in 'overcrowded or unsuitable' accommodation.
If planning permission is given in the next few months, construction could start next spring and the properties ready to move into by 2024.
Designs include provision of a bus route through the development and a residents' car sharing app.
"After an extensive design process we are delighted that our architects Create have submitted the planning application, and we can make real progress towards meeting the housing needs of people in the island who cannot afford or find suitable accommodation." - Steve Williams, Chief Executive of GHA.
Employment and Social Security President Deputy Peter Roffey has welcomed the plans;
"I’m really excited by the plans for this site which place a real focus on improved travel options and amenity value for future residents, as well as making significant inroads into meeting the island’s affordable housing requirements."
Deputy Roffey told the May States Assembly meeting that Guernsey will need at least 1,000 new affordable homes over the next few years.
"We are way short of where we need to be, even at the most optimistic view of what the demand is going to be going forward."
Meanwhile, Health President Deputy Al Brouard used his committee update speech to underline how the lack of suitable accommodation in Guernsey is the biggest barrier to recruiting nurses and medics.
"I need accommodation for our care-workers and our nurses, so please be very careful what you vote for. Do not tie my hands that I do not have the accommodation to provide the staff to provide the services that you then sit in this room and ask me for."
Deputy Brouard revealed HSC currently employs 144 agency staff - up by almost a third on 2019.
An additional 12 are being taken on, but only four have found somewhere to live.
He said the scarcity of affordable properties must be 'tackled head-on and at pace'.