The £100 million project will develop a 2.2ha plot of land between the Baltic Quays and The Sage Gateshead, opposite the Stirling Prize-winning bridge by Wilkinson Eyre.
The development will provide more than 2,700m 2of leisure facilities, 5,000m 2of retail space and at least 324 apartments.
Selected from a shortlist of four hopeful bidders, the massive scheme being developed by Kier Property will transform the site from a multi-storey car park into what councillors describe as 'a significant public space'.
Council leader Mick Henry said: 'It was never going to be an easy decision to make. However, after considerable debate we felt that Kier Property's proposals come closest to our own vision for this area.
'Our desire has been to create a significant public space within Gateshead Quays, perhaps incorporating a network of small streets and courtyards with family-friendly bars, restaurants, street cafés and specialist shops.
'Kier Property's proposal meets that vision: it's bold and imaginative and, crucially, it appears to be commercially deliverable.'
The scheme is still at an early stage, so dates for planning and commencing work have yet to be determined.