The £150million redevelopment of a former barracks has moved a step closer after the site was sold to developers.

Preston Barracks, in Lewes Road, Brighton, is set to be transformed into a retail, employment and academic centre with 350 new homes.

There will also feature a business centre supporting cutting-edge firms along with student accommodation for 1,300.

The project, which has been years in the making, has moved a step closer this week after Brighton and Hove City Council exchanged contracts with the University of Brighton and developers Cathedral Group.

It comes after the Government’s announcement on July 7 that it intends injecting £7.7m into the development as part of a £17.4m investment in University of Brighton research and buildings.

Development bosses say the agreement now means they can work on plans in more details before planning permission is sought.

Professor Julian Crampton, vice-chancellor of the University of Brighton, said: “We have worked closely with the City Council and Cathedral Group to create a comprehensive plan. “The development incorporates a range of uses from residential accommodation and student residences, to space for a new university academic building and innovation space for the university and business to work closely together.”

The plan will see the development of the disused barracks along with land owned by the university next door, the car park of the Watts building, and the Mithras House car park.

At the Preston Barracks site there will be 350 houses, 20% of which are affordable, 500 student bedrooms, a university research laboratory and a health centre. The Mithras House car park will feature 552 student bedrooms and a small retail area. Meanwhile the Watts Building car park will have 264 student bedrooms, further retail space and space for future academic expansion.

Notably there will also be a business incubation centre and cutting-edge facility that will support new hi-tech and design-led manufacturing start-up companies and entrepreneurs.

It is estimates the development will create 740 new jobs over a 10-year period.

Richard Upton, chief executive of Cathedral Group, said: “This is a major development project and will create a new gateway to the city from the north, further establishing the university at the centre of Brighton’s economic life.

“Work will now begin on site immediately to set the stage for the upcoming programme of spectacular events planned for the next two years.”

Jason Kitcat, leader of the council, said the site had “huge potential”.

He added: “The development will deliver hundreds of good homes, while the student accommodation will ease pressures on family homes. Hundreds of jobs will be created and we will radically improve the appearance of this key gateway to the city while supporting Brighton University’s future success.”

The barracks was built in 1793 amid fears Napoleon might invade England.

But, after a period of decline, it has sat empty for more than 20 years.