The site, where the famous motorcycles were made, is situated off the Penn Road island and has already been partially converted into apartments.
But the future of the factory was plunged into doubt in 2018, with the project grinding to a halt when developers QED went into administration.
It led to the site being snapped up for £7.5 million by Wolverhampton-based social and public sector housing specialists Paragon Living Space.
A planning statement, submitted alongside the proposals to Wolverhampton Council, said: "The scheme proposes 171 new dwellings, comprising the following unit mix: 129 one-bed, 33 two-bed, seven x three-bed and two four-bed.
"The development will create an exciting and unique residential conversion. The proposals afford an opportunity to repurpose what is a highly important local landmark building for high quality city centre living and in a manner that reflects the historic significance of the former Sunbeam factory."
The move would see a multi-million pound investment in the building which will secure the site's long-term future and could serve as a "catalyst" for further investment and development in the city, plans say.
It would provide a "meaningful contribution" towards the city's housing needs, use an under-utilised brownfield site near the city centre and create a "mixed residential community with strong links to the city centre".
Robbie Hubball, from Paragon, said after the Sunbeam building was bought: "We’re excited that we’ve been able purchase this site which is iconic and has been stalled for so long. There are already some great properties completed in the site and we’re looking forward to updating the plans and creating a real community for the area."
Commercial real estate specialists Colliers sold the site on behalf of administrators at Quantuma and Receivers at FRP Advisory. The approved development also has a central courtyard, landscaped community hub and games room for residents, alongside 112 parking spaces.
Simon Campbell, managing director of Quantuma, said: "We were never in doubt that a new developer could be found to take on this project. We’re pleased that soon the uncertainty of the past few years will be resolved for those already living on site."
The 150,000sq ft building had stood derelict for two decades before it was bought by property developer Liam Wordley from regeneration company Urban Splash in 2013. Work got under way "immediately" after planning permission was granted by Wolverhampton Council for the apartments a year later.
The project hit financial difficulties in 2018, with administrators looking for someone to take on the development a year later.
More public notices:
A road near a former primary school in Rugeley is set to shut as works are carried out to the footpath and kerbs.
All vehicles will be stopped from proceeding along Hardie Avenue in the section fronting the former primary school.
It will come into the operation on January 17.
It is anticipated the works will be completed by February 4.
Two roads near Wolverhampton city centre will be closed in both directions tomorrow as repair work is carried out by Severn Trent Water. Bell Place will be closed in both directions at its junction with Dobbs Street and Dobbs Street will be closed in both directions at its junction with Bell Place. It is anticipated that the closure will operate between 8am and 5pm.
A road near Sainsbury’s in Perton is set to close as work is carried out to install a new foul sewer to a new housing development. The order prohibits any vehicle from proceeding along Wrottesley Park Road, from its junction with Cranmoor to its roundabout junction with The Parkway. Works are expected to run from January 17 to February 22.