Developers will be invited to submit plans to regenerate the Portersfield area of the town centre, including the site of the former Cavendish House office block.
Cavendish House, previously used by the Inland Revenue, was demolished two years ago as part of plans for an £82 million scheme by developer Avenbury. A neighbouring furniture showroom was also demolished to make way for redevelopment. But the scheme stalled last year after the council terminated its agreement with the developer.
Avenbury had originally proposed a major retail development for the site, including a large supermarket, multi-storey car park and cinema. But the scheme was scaled back to focus mainly on housing, and was finally dropped in June 2021.
Dudley Council leader Partrick Harley said a number of major developers had expressed an interest in the site and he expects a new partner to be chosen this year, with work beginning in about a year's time.
Councillor Harley said the emphasis would likely to be on leisure, with a clear need for better food and drink venues in the town. But he said he did not envisage any major retail development in the present climate.
"We have been advised that the best way to get a good-quality development is to hold a design competition for potential investors," said Councillor Harley.
"We have had interest from quite a few of the big developers up and down the country.
"We have met about 14 of them, either at the Council House, or in some cases at their offices in Birmingham.
"I would hope to have the designs through at least by the summer, and by this time next year we will start to see shovels in the ground.
"I envisage we will have chosen our preferred partner sometime between the end of the summer and the end of the year."
Councillor Harley said he was keen to get things moving as quickly as possible, but said he would not be rushed into a development that people would later regret.
"I want to see things moving as soon as possible, but at the same I would rather we take our time and get things right," he said.
"It's the biggest site we have got in the borough, so it is important we get it right.
"I don't want people to say in 10 years' time we could have done this, or should have done that."
The Express & Star revealed last week that an ice rink previously planned for the Portersfield site was now set to be built in land off Flood Street, opposite the Duncan Edwards Leisure Centre.