Crawley Borough Council plans to build 180 homes near Crawley Library.
A spokesman said the council had bought the 1.87 acre site at Telford Place for the homes and a potential ground floor business.
The site is currently being used as a car park.
Councillor Stephen Joyce, Cabinet member for Housing, said: “Telford Place is a part of the town centre we’ve wanted to improve for a long time and I’m delighted that we’re now in a position to do this.
“The site will provide a major residential development in the town centre, including much-needed affordable housing.”
A meeting of the Full Council on Wednesday (July 22) saw councillors agree to investigate options for developing the site.
A spokesman said: “The 1.87 acre site was bought with the aim of delivering a major residential development in the town centre, as well as the potential for a ground floor commercial unit.
“It’s expected that around 180 homes can be built on the site. Councillors have agreed to an in principle mix of 40 per cent affordable housing and 60 per cent market housing.
“Build costs can only be accurately determined following detailed feasibility and design work but are anticipated to be in the region of £25m with the market housing subsidising the costs of the development.”
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