Developers are seeking to demolish a row of buildings along Middle Street, in Somers Town, including the Outside In food court and Sunrise Stained Glass to make way for 163 flats and 21 student homes.
Most of the land earmarked for development is owned by Portsmouth City Council and the proposals, three years in the making, can't progress until the freehold is sold to developers PVD1 Ltd or the leasehold is extended.
Tom Vail, principal at PV Developments, described it as an 'exciting' opportunity. He said: 'It's a really obvious area for regeneration, especially looking at Leamington and Horatia and the wider area - it's quite exciting.'
A report submitted to the council states that the required 30 per cent affordable homes will be provided in the development, which will be 11-storey in part.
However, Councillor Cal Corkery said: 'If any agreement is made with the developer to sell the land there should be a condition included that means they have to include more affordable or social housing.
'As it's council-owned land we should be looking at more affordable homes than the usual 30 per cent. The council shouldn't just hand it over no strings attached.'
Council leader Cllr Gerald Vernon-Jackson agreed. 'This is about the value of the land,' he said.
'To make it worthwhile for the council the developer would usually offer a sum of money or offer to build a certain amount of social homes that either the council or a housing association would run.
'I would prefer that we could have social housing from this rather than money.
'But we as a freeholder are not allowed to unreasonably withhold them from redeveloping the site. Unfortunately there's not a lot we can do in planning law.'
Mr Vail commented: 'They are absolutely right in that every city in the UK needs affordable housing at the moment.
'The first feedback we had from the planning team was that a contribution would be a viable alternative.'
Plans have to be approved by the council's planning committee or a delegated officer.