The move allows Liverpool City Council and developer St Modwen to press ahead with their rival “Project Jennifer” regeneration scheme at Great Homer Street in Everton.
This includes a Sainsbury’s supermarket, 75,000 sq ft of retail, a market hall and 480 new homes.
Last month, Tesco lost its legal challenge over a planning inspector’s decision to refuse permission for its standalone scheme on part of the Project Jennifer site.
The two parties were at loggerheads because none could proceed without the other’s land.
A Tesco spokesperson said: “We were disappointed with the recent legal decision as we had an exciting development proposed for Great Homer Street. However, we recognise that the council wants to see the total regeneration of the area happen sooner rather than later.
“Following discussions with the council we will now enter negotiations to sell our land, which would remove any reasons for further delay.
“We have a number of other opportunities to invest in Liverpool and we look forward to bringing these projects forward.”