The long-awaited second phase of the Houndshill Centre looks set to go ahead after town hall chiefs agreed to borrow £22.5m to fund building work.
A scheme to build a cinema and new Wilko store on the Tower Street car park had stalled due to uncertainty over ownership of the Houndshill.
But after the council bought the centre for £47m last week it is now preparing to develop the extension itself, which could bring in additional income of £800,000 per year.
A council report says the "development of phase two needs to progress at pace" and is "crucial to the delivery of the town centre’s future success."
The money will come from prudential borrowing, and a fast track bid will also be made for up to £5m from the government's Future High Streets Fund.
The council says the project "improves the council’s position financially" due to increasing its annual income by £170,000 from parking, a restaurant and a kiosk, plus an expected £630,000 in annual rent from the phase two extension.
The report says it is profitable for the council to take on the phase two extension itself due to the additional income which will be generated from increased footfall and parking and "all the income from the restaurants, cinema and Wilko."
The report adds: "The development of Houndshill phase two will strengthen
and diversify the town centre economy and would particularly enhance the night time trade in the town centre.
"This will bring forward the development of the new IMAX-style cinema, new Wilko store and restaurants.
"The council requires the existing Wilko relocation by April 2020 in readiness for the development of Talbot Gateway phase two."
The delay in building the extension has had a knock on effect on the Talbot Gateway where a new tram terminal and Holiday Inn hotel are due to be built on the Wilko's site.
Wilko is now expected to relocate to a temporary location to enable demolition of its current building.
The council announced last week it had borrowed money to buy the Houndshill for £47.6m after owners BCC Eiffel went into administration. The price was less than half of the £105m BCC Eiffel spent on the complex in 2015.
Retail experts CBRE, who advised the council over the sale, have now been appointed to help manage the shopping centre for the next 12 months.