A former prison earmarked for migrant accommodation could house more than 1,000 people.
The Home Office is "still working" on plans to house asylum seekers at Northeye on the outskirts of Bexhill.
No final decision has been made on the site but, if it is used, the government hopes it could house around 1,200 people at its peak.
Northeye was a category C prison from 1969 to 1992 and suffered a massive fire because of a riot in April 1986. Roofing which contained asbestos was set ablaze and there have been fears about site safety.
It comes as sweeping asylum reforms are poised to become law as a barge arrives at the port where it is set to house hundreds of migrants.
The news marks a step forward in efforts by the government to cut the number of Channel crossings and get to grips with the backlog of asylum cases awaiting a decision.
The Illegal Migration Bill is "moving forward" after ministers saw off fresh challenges by peers who tried to make further changes to the proposed legislation.
While Northeye plans are not yet confirmed, the Home Secretary has agreed plans to house up to 2,000 single, adult male asylum seekers at former airbase RAF Scampton in Lincolnshire, with initially 200 people arriving at the site.
The Home Office said it is still working on developing the site and is yet to confirm when it will open.
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