Wolverhampton Council chiefs signed off on proposals for 306 apartments at the former store and multi-storey car park in early March last year.
But now it has been revealed the car park, on Skinner Street and School Street, will instead be knocked down to make way for 145 apartments.
It is understood the Gorgeous Nightclub could be relocated elsewhere within the Beatties development, but the details have not been finalised.
The car park had been earmarked for 33 flats, with the change meaning an extra 112 will be built there to bring the overall number to 418 homes.
Councillor Stephen Simkins, deputy leader for Wolverhampton Council and cabinet member for city economy, said: "We're actively encouraging more homes in the city centre, we want to utilise these spaces and if you use it as housing you've got an active market in the city centre – so it creates not only housing but also provides a boost to the local economy, and city centre living is on the up."
It will be made up of 104 one-bedroom flats, 23 two-bedroom and 18 three-bedroom apartments built under the plans from SSYS Beatties Limited.
The move – and latest application to council planning chiefs – comes after a slight rethink of the project to bring further apartments to the city centre.
Meanwhile Stuart Anderson, MP for Wolverhampton South West, said the Beatties building was "very iconic" and was a supporter of regeneration across the city.
The Victorian building was bought for £3 million in 2020 and sources at the time told the Express & Star it could be converted into apartments. The famous Beatties name has been synonymous with Wolverhampton since the shop was launched by James Beattie in 1877.
It was taken over by House of Fraser in 2005 but the Beatties name remained on the building and many shoppers continued to refer to it under its historic name.