The force wants to build a new Black Country headquarters in the borough to replace Brierley Hill police station, which is due to close down at the end of next year as part of its estates programme.
A plot on Hall Street had been identified but an agreement for it broke down due to a funding row with Dudley Council.
Now the Express & Star can reveal a deal is being thrashed out for a new site – believed to be on Castlegate Way.
According to a police source, talks over the site are progressing “at pace”.
It is understood the site currently occupied by Footman James is under consideration.
A spokesperson for the insurance firm, which has been at the site since 2014, said: "Footman James holds the lease to Castlegate House until November 2024."
A spokesman for the West Midlands Police and Crime Commissioner’s office refused to deny that discussions were taking place.
He said: “We are committed to building a brand new, state of the art police station in the centre of Dudley.”
The deal for the derelict Hall Street site, which was once earmarked for a mosque, fell apart last year after West Midlands Police refused to meet Dudley Council’s asking price, believed to be around £750,000.
Council leader Patrick Harley said more than a dozen offers were currently “on the table” for the site.
“We hope to have a police presence in the town centre as soon as possible,” he added.
Dudley town centre has been without a police station since the one on New Street was shut down to cut costs in 2017.
Labour councillor Keiran Casey, who campaigned for a new station alongside then Dudley North MP Ian Austin in 2019, said the saga had dragged on for far too long.
“Crime and anti-social behaviour is one of the biggest issues that is raised with me as a councillor, therefore I want this issue resolved,” he said.
Councillor Casey, who represents Castle and Priory ward, said he has called for a meeting with PCC Simon Foster to discuss crime in the area and the new super station.