Plans for a new Falmouth School sports centre, and 89 new homes, on the site of the former Budock Hospital have taken a major step forward .

Cornwall councillors met in secret session in Truro this week to consider two housing schemes which are part of a much larger project which also involves a community sports centre within the grounds of the Academy, and a major road scheme.

The deal could however pose new questions over the long-term future of Falmouth Town Football Club, which last week announced it was also hoping to reach agreement with the school - but which has yet to hold a crucial shareholders’ meeting to consider selling its Bickland Water Road site for housing.

But a report presented to councillors says a deal, backed by the Academy, Cornwall Council, the National Health Service and the Department for Transport, is already agreed in principle.

“Taking into account its best consideration requirements and the overarching objective of facilitating this important community project, a commercial settlement has been reached,” says the report, which will be considered by the council’s Finance and Resources Advisory Committee this morning.

The project would mean a new lease of life for the currently-derelict hospital grounds. The former workhouse was demolished several years ago.

Up to 40 per cent of the 89 new proposed at Union Corner, would be “affordable.”

The deal is also linked to a £2.2million replacement roundabout at Union Corner, linking the A39 with Budock and Boslowick and potentially unlocking acres of farmland off Bickland Water road for development. Today’s report indicates that the scheme is progressing smoothly, following Truro and Falmouth MP Sarah Newton’s concern in September that the council was dragging its heels. The council said at the time it still needed to complete its formal consultation.

Cash-strapped Falmouth Town Football Club, which hopes to raise more than £2million by selling its existing ground, believes the school’s long-known project can still be adjusted to provide a new home for the town’s soccer fans.

Officials are confident they have not left it too late, but declined to comment. Brett Miners, the school’s headteacher, said he had held a number of “productive” talks with the football club and looked forward to “exploring future options.”

The sale of 6.6 acres of land at the Union Corner playing fields means the school will be able to acquire the former hospital site.

It plans a multi-surface sports pitch, changing facilities and associated access and car parking. It would also consolidate the school’s sports and teaching facilities onto one campus site.

The deal is complex, as the school has its land on a 125-year lease from freeholders Cornwall Council, and at the moment does not have the detailed planning consent required to finance its ambitions.

But the report says “the site is included within the residential expansion zone for Falmouth which is set out in the draft Town Framework” and does not foresee difficulties. A public meeting to outline the proposals was held in May.

The council report says: “The project would facilitate the release of land zoned for the residential expansion of Falmouth (together with the delivery of affordable housing).”