Demand is expected to be high for the Greenacres development on the edge of the Norfolk market town.
Persimmon Homes has submitted detailed plans to build a mix of two, three and four bedroom houses as well as 12 one and two bedroom bungalows in Norfolk.
Of the 85 new properties, 28 will be affordable housing for the community.
Surrounded by the Waveney Valley countryside, the development, called Greenacres, is just a short distance by car from the coast and under 25 miles from Norwich city centre.
The homes will be built on a partially developed site between Denmark Lane and Old High Road in Diss, which was first granted consent for 114 homes back in 2009. Persimmon Homes' new properties will add to the previous developer's 29 already occupied homes at the site.
James Nicholls, land manager for Persimmon Homes in Anglia, said: "If approved, Greenacres will create a sustainable development that will have a positive impact on both Diss and its people.
"The proposed design has been developed with regard to both South Norfolk's Place Making Guide 2012 and also Building for Life 12. The planning application includes public open space, vehicular access and associated infrastructure."
Managing director for Persimmon Homes, Andrew Fuller, added: "Our proposals are for a wide mix of house types from one to four bedroom properties which will cater for everyone from first time buyers to large families.
"We will be offering a range of assistance schemes at Greenacres to help get people moving, including part exchange and the government's new shared equity scheme, Help To Buy, which will be available on all properties and requires just a 5 per cent deposit."
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