A repeat of two previous competitions held in the world's first garden city more than 100 years ago, the contest attracted entries from around the world, including the USA, Japan, Thailand and Australia.
The plot will be leased to social landlord North Hertfordshire Homes by landowner Letchworth Garden City Heritage Foundation, and work is expect to start on site in 2008.
Project architect Alex McCartney said: 'We entered because [we] had done some good work on eco-homes in the past and it looked like an exciting project.
'For the garden city, we talked about something that's really from the earth. I think what's interesting about this competition is that it's also about affordable homes.'
The firm picks up a £25,000 first prize. A runner-up award went to London-based practice Project 35 Architects.