Council chiefs are to buy a major site for an estimated £6.5 million in a bid to end a stand-off with British Gas.

Brighton and Hove Council will tomorrow begin moves to force the power giant to sell the former gasworks in Church Road, Hove. Its powerful policy and resources committee will tell legal staff to prepare a compulsory purchase order (CPO) for the land.

The decision will pave the way for a multi-million pound redevelopment of the site, which has been derelict for more than ten years. Developers Beeleigh have already won permission for a supermarket and two-storey car park on the site.

But BG plc, formerly British Gas, refused to sell the land and instead submitted two applications of its own for a supermarket. Both were turned down by the council and appeals by BG are due to be decided by a planning inquiry next month.

Beeleigh director Graham Jackson said his firm would cover the council's costs in taking out the CPO and buying the land. And he revealed supermarket giant Tesco is already signed up to take over the new store when it is built, creating 60 jobs.

Beeleigh will also pay for a new school to be built on the council-run car park in Malvern Street so the present St Andrew's School can be demolished to make way for the scheme.

Mr Jackson said: "With Tesco we have estimated the cost of buying the land will be around £6.5million and the total cost of the project in excess of £10million. In the short term there will be around 200 jobs created during construction, with another 60 permanent jobs created by the supermarket. The school will move from its current premises, which includes temporary classrooms, into a larger building."

A BG spokeswoman said the company declined to comment until they had seen the CPO proposals. Hove councillor Simon Battle said: "This sends a strong signal to BG, Beeleigh and the people of Hove that we want this site redeveloped."