Recorded levels of nitrogen dioxide on the A472 at Hafodyrynys were higher than anywhere else apart from central London 2015 and 2016.
These far exceed World Health Organisation guidelines. Next week, Caerphilly council’s cabinet will be asked to approve plans to purchase the 23 worst-affected homes.
The A472, between Newbridge and Pontypool, suffers pollution from an estimated 21,000 vehicle movements a day.
There have been many proposals for improving air quality, including buying and demolishing the houses and businesses, which would cost about £4.5m.
But the council initially rejected the idea saying it could only offer market value for a compulsory purchase.
Leader Dave Poole said the low value of properties because of the pollution could put home owners into “financial difficulty” buying elsewhere.
But after an agreement with the Welsh Government, the local authority now plans to buy the worst-affected houses on the south side for 150% of market value.
“The council has always maintained that we must put the interests of Hafodyrynys residents first,” Mr Poole said.
“This proposal really is a ‘win-win’ situation for all concerned and we are pleased that the Welsh Government has responded to our calls for funding to provide residents with a fair financial package.”
Deanna Hardwick, who lives on the road, said she had “mixed emotions” about the plans.
“This is my home, my children were born here and we do have a life here,” she said.
“But on the other hand the road and the situation isn’t going to get better any time soon, and it’s made our properties worthless, so even if we wanted to move in the future we couldn’t.”
She said the thought of having to look for somewhere to live was “very stressful”.
“Can we afford to buy somewhere?” she added.
“My husband and I still have a mortgage and a long time left on it.
“I’ve got three small children and they would love to go outside on bikes.
“If we move and we do get the chance then they can get out and be more social.”
Demolition of the properties would allow the council to achieve air quality compliance by 2022.
A report will be considered by the council’s cabinet next week before it submits a plan to the Welsh Government.