Concerns were raised over proposals to develop an estate in the Llanbadarn Fawr-area, where homeowners had to battle to keep water out of properties during heavy rain in December.
On Wednesday, the council's planning committee voted in favour.
Assurances were given that flood prevention measures would reduce the risks.
Twelve committee members voted in favour, with five against and one abstention.
Earlier, Ceredigion councillor Paul James said the planned new homes on private land, between Llanbadarn Fawr and Waunfawr, would add to the problems caused by surface water.
"The danger and the impact of a new estate would cause havoc regards to water and run off," said Mr James, who also sits on the community council which opposes the plans.
"On Boxing Day the stream of water coming down the hill was dangerous not just putting people's homes in danger but also for drivers who were driving straight into the fast flowing water.
"Homeowners had to come out with their brushes and sweep the water away to prevent it from getting in to their homes and I was handing out sandbags to try and hold back the water."
Ben Davies, who lives across the road from where the new estate will be built, said: "At the moment, it's a green field and this gives us some hope that it'll soak up the rain water and hold it back from the village a little longer.
"But there are already occasions when the water is pouring down the road and it's only a matter of time before we see a bad accident with these flash waters and someone is killed here."
The issue of recent floods in York and Cumbria were raised during Wednesday's planning hearing.
However, assurances were given that a 300-cubic metre (66,000 gallon) water tank and hydro-brake would be part of the development to reduce the risks and improve the current situation.
A plan for 48 new homes in Ceredigion has been approved - despite fears the area is prone to flooding.