Over 13,000 people live in these chawls spread across 93 acres of land in four areas - Worli, NM Joshi Marg, Sewri and Naigaon.
"The previous government had discussed this matter for over 15-16 years but did nothing about it. We are determined to complete this project. Its progress shouldn't stop. This was our dream," said Maharashtra Chief Minister Devendra Fadnavis at the inauguration ceremony.
Over 16,000 flats will be built, out of which 68 per cent will be allotted to existing tenants. The remaining will be sold by the state.
The new construction will get a floor space index (FSI) of 4 and each apartment will be 500 square feet in size.
He further added that the government was working on a fast track mode for police housing and in the next two years, its results would be visible.
In March, the Maharashtra Housing and Area Development Authority (MHADA), the nodal agency for the redevelopment project, shortlisted L&T Realty and Shapoorji Pallonji to redevelop the chawls.
The Sewri site will be redeveloped by the Mumbai Port Trust, which owns the land.