Undercliff Drive was destroyed in severe weather in February 2014.
Councillor Phil Jordan said the solution was "long-awaited" and hoped it would lead to the entire road being reopened.
Survey work is due to start at the site in the coming weeks.
Parts of the existing road will be widened to enable vehicular access to properties, and a single track road will be built close to the existing route.
Designated parking spaces will also be provided.
The council said the scheme, at a "complex geological site" near a designated beauty spot, had "not been straightforward".
Mr Jordan added: "I am delighted we are finally in a position to start the process of allowing at least some permanent access to the properties situated there.
"I really do look forward to this scheme being finally completed and access being re-established."
Residents unable to drive to their homes for more than a year following a landslide on the Isle of Wight will have a temporary road built by the summer, the council has said.