Hammerson will contribute £10m to buy up the land, and has agreed to pay the interest on a further £10m that will be funded by council borrowing.

The long-delayed Sevenstone scheme, where Sir Robert McAlpine acted as construction adviser, was put on hold in 2008 but action needed to be taken before the crucial purchase orders expired in July.

Councillor Paul Scriven, leader of Sheffield City Council, said: “This is the biggest step forward we have seen in making Sevenstone a reality.

“In basic terms the council will commit £10m to securing this development opportunity. What we are saying now is that Hammerson will provide additional funding so that we can move forward and secure the development site during 2011.”

The scheme will provide Sheffield City Centre with 860,000 sq ft of retail and mixed use space.

Richard Brown, project director at Hammerson, said: “We are in the final stages of negotiations with Sheffield City Council to ensure the CPO for the scheme can be delivered.

“We are working with the council to deliver a scheme which matches the requirements of retailers and the people of Sheffield and following the delivery of the CPO, we will be in position to progress the revised masterplan.

“We hope to be in position to share details of the emerging scheme later in 2011.”