Stockport Council's executive has agreed a deal with Sainsbury's over redevelopment of the Knightsbridge site on Great Portwood Street in the town centre.
Sainsbury's was appointed as development partner for the five-acre site in January 2008 and has spent the past two years working up a development agreement.
Cllr Kevin Hogg, executive member for regeneration at Stockport Council, said: "The deal with Sainsbury's is further demonstration of Stockport bucking the trend and continuing to attract investment during even the toughest of times.
"The next step is to consider Sainsbury's detailed proposals for the site, and consult with local residents and businesses. We are committed to working closely with Sainsbury's to drive this development forward."
Paul Miller, Sainsbury's development surveyor, said: "We are pleased that the council's executive has approved the Knightsbridge development agreement. Sainsbury's has worked closely with Stockport Council to draft a set of proposals which we believe will help to regenerate the area, creating new jobs and investment.
"The current Sainsbury's store is very popular but we would like to provide customers with a new, more modern supermarket on the Knightsbridge site.
"We look forward to consulting with the local community over the coming months to find out their views on our proposals before we submit a planning application."
Stockport Council is advised by Cushman & Wakefield.