A derelict factory site in Bath on which Tesco wants to build a supermarket has been earmarked for 100 new homes in a new planning blueprint.
The former Bath Press site, in Lower Bristol Road, has been allocated for housing as part of Bath and North East Somerset Council's revised core strategy.
However Tesco, which owns the 7.5-acre plot, is committed to developing the land and is currently appealing against a council decision to refuse planning permission for a £80 million supermarket scheme.
A spokesman for the supermarket giant said it would be pushing ahead with the appeal, and added: "We want to continue having ongoing discussions with the council."
Tesco's plan for a 6,300 square metre supermarket, as well as ten homes and office space, was turned down by B&NES Council's development control committee because of concerns about traffic and the impact on small businesses in nearby Moorland Road.
The local authority has said the new core strategy will not affect the way the planning inspector deals with the appeal.
However, any alternative plans for the site would have to cut the size of any retail element. The revised core strategy says that 30 of the homes must be affordable housing and that they are projected to be built between 2015 and 2018.
Councillor Tim Ball, the council's cabinet member for homes and planning, said he wanted to see Tesco and the local authority working together to come up with an appropriate plan for the site which would benefit the local community.
Mr Ball (Lib Dem, Twerton) said: "I think this is a very positive move, it would be great to see additional housing for the local area built on a brownfield site."
Councillor Sharon Ball (Lib Dem, Westmoreland) also welcomed the move.
She said: "This element of the core strategy makes a huge hypermarket on the Bath Press site very unlikely, but it still leaves room for a modest-sized store that would be more in keeping with the area."
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