The play area will be created on green land between Ward Street and Coningsby Drive as part of the Ettingshall Place development on the edge of Ettingshall and Bilston.
A variety of trees, shrubs and flowers will also be planted on the land, which is currently disused.
The project is being funded by Persimmon homes, the developers behind the Ettingshall Place estate where around 460 homes are being built for an estimated 2,200 people.
The £800,000 funding is part of a Section 106 agreement with Wolverhampton Council.
Such agreements are made between local authorities and developers in a bid to mitigate the impact of housing schemes on the local area.
Nearby Bilston CE Primary School has already benefited from two junior football pitches funded by Persimmon.
Councillor Beverley Momenabadi, who represents Ettingshall, said: “This is a key investment for this area so I am really pleased. We held a consultation last year where we listened to what families in the area wanted to see on the green space.
“I’ve been working closely with both Councillor Steve Evans, the officers at the council and Persimmon Homes – who have built a lot of new houses in the area – to bring to life a wonderful park and play area in Ettingshall.
“I’m pleased to announce that following consultation and our work in partnership with Persimmon Homes, Section 106 monies have been secured and almost £800,000 will be spent on the area.”
Councillor Steve Evans, the city council’s cabinet member for city environment, added: “Our Labour council will be delivering on this, with work starting early summer.
“I’d like to take this opportunity to thank everyone who responded to the consultation and we look forward to the development getting well under way come the summer.”