By Ed Ballard

LONDON--Canary Wharf Group said Tuesday it has received planning permission for a development including 3,100 homes that will grow the area of its Docklands estate by 31%.

The 4.9 million square-foot Wood Wharf project to the east of the existing Canary Wharf in London's Docklands has been approved by Tower Hamlets council, said the company's parent Songbird Estates PLC (SBD.LN).

Wood Wharf--which will eventually host 1.9 million square feet of office space as well as a hospital, a school and a network of parks--is the company's third major residential development to be given the green light this year.

A 58-story tower at Canary Wharf was approved in March, and the $1.71 billion redevelopment of Royal Dutch Shell PLC's (RDSA.LN) central London headquarters was cleared in June.

Soaring house prices have lured other big commercial landlords--Land Securities (LAND.LN) and British Land Co. (BLND.LN)--into the residential market.

Work is expected to start in the final quarter of the year, Canary Wharf said. The first phase of the 30-building development is slated for completion in 2018, coinciding with the launch of the Crossrail train line being built across London.

Canary Wharf, which is trying to establish Docklands as a home for high-growth industries as the banking giants that the area is known for downsize, said it hopes to lease office space to technology, media and telecommunications firms.

Last year it opened the Level 39 "accelerator" for financial technology startups, offering discount office-space over two floors of One Canada Square, London's second-tallest building, in a bid to establish Canary Wharf as a hub for young companies.

Write to Ed Ballard at ed.ballard@wsj.com

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