The council plans to sell a 6.19-hectare disused allotment gardens site in the city’s Lockleaze area to the pensions and insurance giant.
The land, which has been initially valued at an estimated £7m, will be used by L&G to deliver the offsite homes, which when completed will be acquired by the council with up to 51% for affordable tenures.
Bristol is among a string of councils ramping up its housebuilding ambitions after the Housing Revenue Account cap was abolished.
The local authority is planning to build 1,000 new homes over the next five years, which it said will include a number of offsite projects.
In October it was announced that Bristol Council had agreed a deal for 200 modular homes with BoKlok, a joint venture between Swedish construction giant Skanska and retailer Ikea.
On the new deal with L&G, the council said the terms are being finalised and it is preparing to submit a full planning application – it hopes that work will start later this year.
Providing the 96 affordable homes in the scheme will cost an estimated £16.1m, with 56 delivered through a Section 106 agreement.
The council’s cabinet will consider proposals for the development, known as Bonnington Walk, next week.
Paul Smith, cabinet member for housing at Bristol Council, said it was trying to speed up housebuilding across the city and the deal with L&G means that homes will be built in “days instead of months”.
He added: “It is particularly important to be building homes that people can afford, and I am really pleased that there’s a commitment for up to 51% of the homes to be affordable through a mixture of homes for council housing and shared ownership.”
The council is giving itself the option to buy the affordable housing units, secured through the Section 106 agreement, or to nominate a HomesWest registered provider to do so, according to a report prepared for the council’s cabinet.
Bristol Council already has a relationship with L&G as part of a separate deal to build 500 homes on a major site in the city centre.
Rosie Toogood, chief executive of L&G Modular Homes, said the homes will include low-carbon technologies, meaning they will have an grade A energy performance certificate.
She added: “We are determined that Bonnington Walk will be an exemplar of innovation and sustainability.”
L&G is targeting building 3,000 offsite homes a year through its factory, which has met with delays since being first announced in 2016.
The firm is also making its mark on the affordable homes sector through a for-profit registered provider, and last week revealed it was pumping an extra £275m into a separate business division aiming to deliver 3,000 homes a year by 2022.
