Columbia House, in Columbia Drive in Durrington, will be converted into 104 flats and two new floors will be constructed, creating space for 10 extra apartments.
Developer Pullman Construction will also build three new blocks on the site with commercial space and room for 36 more homes.
Nigel Brooks, one of the site’s owners, said: “We’re very happy work is beginning on Columbia House - this is good news for Worthing.
“We want to provide good-quality homes to buy to help residents on to the property ladder, as well as creating a development people will be proud to live in.
“We hope to have the first homes on the market by the second half of 2021.”
An application to add two floors and 14 flats was refused last May, before Worthing Borough Council’s planning committee agreed to revised plans in December.
Prior approval had already been granted in 2016 to convert the block, which was built in the late 1970s, into 102 flats.
Workers are erecting scaffolding this week after labourers began clearing rubbish and overgrown areas last week.
Construction is expected to take 15 to 18 months.
Once complete, Columbia House will contain studio flats and one and two-bedroom apartments, served by 74 car parking spaces.
Kevin Jenkins, the council’s cabinet member for regeneration, said: “It is fantastic to see yet another development get underway in Worthing, boosting our town’s recovery from the Covid-19 pandemic.
“We are confident that this inward investment by Pullman Construction in the Columbia House scheme will provide valuable homes to residents once it is complete.
“It demonstrates that companies see Worthing as a good place to invest; now more than ever it is ‘Time for Worthing’.”