Council Executive has agreed to explore further proposals from house builder Springfield Properties and social housing provider Wheatley Group, which could complete the land assembly required to allow the entire Deans South estate to be redeveloped.
West Lothian Council is already constructing 54 new homes for rent on the site and has plans to develop a further 37 houses.
Housebuilding company Springfield Properties has reached agreement to buy a significant number of the remaining private homes in Deans South. Reaching agreement on all remaining homes would enable the whole site to be redeveloped.
Springfield and Wheatley Group would work in partnership to develop the rest of the site, mainly for social housing. Springfield would submit a planning application on behalf of Wheatley for around 150 homes.
Leader of the Council Lawrence Fitzpatrick said: "We would welcome the opportunity to work alongside the Wheatley Group and Springfield to find a way for the entire Deans South site to be redeveloped.
"There is huge demand for new homes for rent in West Lothian, and the proposals being developed would see more homes built than would be possible working around the existing properties.
"We wish to explore the proposal further and hope it will lead to a long-term solution for the entire Deans South estate."
Wheatley Group is made up of six housing associations including West Lothian Housing Partnership, Dunedin Canmore and Barony Housing, who all have existing properties in West Lothian.