The 155-bedroom, seven-floor hotel will be created with the conversion of empty offices in North Street and will mean about 60 new jobs.
The application comes from Scottish and Newcastle Retail and is for a Sixties building opposite Ship Street which was occupied by the Prudential.
It has been empty for six years.
Under the new scheme, there will be an entrance on the ground floor with a restaurant on the first floor.
The bedrooms will be between the second and the seventh floors.
Scottish and Newcastle is prepared to pay for tourist direction signs in the area and about £30,000 towards closed-circuit TV cameras at the junction of North Street and Ship Street.
Planning officer Paul Earp said there was concern about the loss of such a large office building but it was not high grade.
He added: "The occupation of this large town-centre building and renovation after years of neglect, particularly to provide much-needed hotel rooms for visitors, is to be welcomed."
Scottish and Newcastle estimates the budget-style hotel will provide about 60 jobs. It will also have six meeting rooms.
No parking is planned but the building is next to a car park and most guests are expected to arrive by public transport.
The application has been welcomed by tourism chiefs who want more hotel rooms in the town centre within walking distance of the Brighton Centre where most conferences are held.
Councillors consider the scheme on Tuesday.
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