Wolverhampton Council said the move was "progressing" with a hotel identified for the junction of Ring Road St Marks and School Street as part of the project.
And the authority has insisted that the delayed major development - which will see shops, restaurants, leisure activities and a multiplex cinema take over land around Salop Street - is progressing but has been "re-phased".
Councillor Stephen Simkins, deputy leader and cabinet member for city economy, said: "Given the unprecedented economic impact of the pandemic – especially on the leisure market – the Westside development has been re-phased. Our number one priority is to bring in a premier hotel brand to boost the city's offer.
"Procurement for a hotel at the junction of Ring Road St Marks and School Street is progressing, with due diligence well underway, and the council remains committed to regenerating this area of the city.
"This will complement the reopening of the Civic Halls and support our five-year strategy to make Wolverhampton an events city.
"We are also continuing positive negotiations with leisure operators and, as with all of our major capital projects, we will of course ensure any developments make financial sense and are in the best interests of the people of Wolverhampton.”
It comes as the multi-million pound transformation of the city centre was kick-started around Victoria Street area under plans to pedestrianise the area, with the street closing to traffic permanently.
A new public square will be built where Victoria Street meets Skinner Street and Bell Street whilst a "box park" will be created on Bell Street to provide a new food and beverage offer and play host to live entertainment.
Councillor Simkins added the works were well under way to transform the "west side of the city centre and its connecting public realm and events spaces".
He added: "The works – funded from the £15.7million the council secured from the Government’s Future High Street Fund – will improve the public environment, create events spaces and support businesses by improving footfall."
The scheme had previously been dubbed the "Westside Link" and had been put forward to better connect the city centre to the Westside development when it opens.
Work was due to start last summer on Westside but it was put on hold due to Covid. It led to fears the scheme could become the next Summer Row – a major retail development in the city that was scrapped in 2011 in the wake of the financial crisis.