The now vacant nine-acre brownfield site is off Qualcast Road, next to the Wyrley and Essington canal basin, and will form part of the Canalside Quarter, made up of new homes, public spaces and offices.
Canalside's first phase has seen council-owned land at Horseley Fields made ready for development, while the building of around 350 homes on the historic Union Mill site is expected to start in 2021.
The former British Steel site was a regional distribution and stockholding centre which, following the collapse of British Steel in 2019, has stood empty.
Council leader Ian Brookfield said: "Capital projects such as Canalside are essential to the city’s regeneration strategy, wider transformation and economic well-being post Covid-19.
"We need the local jobs and multi-million-pound investment that schemes like this bring – now more than ever.
"This city has a range of fantastic assets, great connectivity, strong partnerships and fantastic people – all of which have helped us to weather the storm and maintain strong interest from investors and developers. We need to be confident and ambitious about our local strategy for growth whilst pressing the Government for investment to help deliver our ambitious local plans."
Councillor Stephen Simkins, cabinet member for economy, added: "The British Steel site represents the largest redundant brownfield site in the city centre and has long been identified for regeneration. With this acquisition, the transformational Canalside vision is one step closer to delivery.
"Not only does it bring back into use large parcels of brownfield land, it also enables us to take advantage of our fantastic waterways and the heritage that comes with it.
"Urban living forms a critical part of how we are re-imagining our city centre and will help us meet the increasing demand for housing.
"It will also provide hundreds of jobs and a boost our economic recovery from Covid-19.
"Canalside is a large and exciting opportunity that will require determined and skilful leadership with our partners to realise the opportunity."