The old fruit and veg market in Circus Street is to be turned into a new library for Brighton University and up to 400 student flats.
Cathedral, the developer, also wants to build a dance studio for South East Dance as well as offices, shops, creative workspace, a market and up to 200 other flats on the land.
The £80 million “Grow Brighton” scheme revives and amends an existing plan for the site.
The main market building has been derelict for many years although an agreement was signed in 2007 to make use of the land.
Brighton and Hove City Council’s Green cabinet is being asked to approve a modified version of the agreement.
The changes – fewer offices and more student flats – have been made in recognition of the harsher financial landscape since the credit crunch.
The council believes that the revised scheme would bring economic benefits worth £150 million to Brighton and Hove over ten years.
It is expected to create 170 permanent jobs when it is finished in 2015 with 140 construction jobs being created in the meantime.
Cathedral hopes to submit a planning application in October and, subject to approval in January next year, start work on the site in June next year.
The cabinet will discuss the stalled project next Thursday (9 February).
A report says: “Approving the proposed recommendation is the only way that the regeneration benefits identified with this scheme can be unlocked.”
Council leader Bill Randall said: “Times are tough but we’re working hard to get developments going.
“These changes reflect current market conditions and the city’s high demand for housing and student accommodation.
“This project will create about 140 full-time construction jobs. Many of those will be apprenticeships for our young people.
“Reducing office space would give us much-needed easy-to-let accommodation and allow us to meet the city’s really high demand for student housing.
“Purpose-built student housing is very important as it frees up family homes elsewhere.”
Brighton University vice-chancellor Julian Crampton said: “We have long been active supporters of the need to regenerate this area of the city.
“The redevelopment of the site will enable us to enhance the activities and presence of the University of Brighton’s Faculty of Arts, and signals a major investment by the university in the creative, cultural and digital sector for the city.”
The scheme includes a new public square and much-improved street scene are among other benefits.
The land includes the former fruit and vegetable market, the NCP Kingswood Street car park and the university’s Circus Street annexe.