Former nightclub Kiko's is one of two sites that could be sold off by Wakefield Council in a move to bring in cash to regenerate Pontefract.
Senior councillors are being asked to give the go-ahead to the sale of the old club as well as the former fire station site on Stuart Road in the town.
Both would be purchased by Wakefield District Housing at a 'less than best' price, with each site earmarked for affordable homes.
The cash generated from the sale will be used to support the ten year Pontefract Vision 2028 masterplan, the council said.
This includes creating an "attractive gateway" into the town centre at Tanshelf and "reconnecting" the town centre and Pontefract Castle.
The council, WDH and Pontefract Civic Society created the vision to set out shared priorities for Pontefract and its future development.
Coun Les Shaw, Wakefield Council’s Cabinet Member for Corporate Services, said: “Transferring these sites can help to regenerate this key area of Pontefract. The redevelopment with new homes will help create a more attractive and welcoming gateway into the town centre, and will support further positive investment into the local area.”
Kevin Dodd, Chief Executive at WDH, said: ““By working closely with key partners and the public, WDH will invest in Pontefract to ensure that it becomes not only the vibrant town centre but a location for future generations.”