A new 'public sector hub' could be established in Darlington thanks to hundreds of Department for Education jobs relocating to the town centre.
Darlington Borough Council has made an agreement with the DfE to create a purpose built office block adjoining the Town Hall to accommodate staff moving from old offices at nearby Mowden Hall.
A new leisure complex with a cinema, shops and bars, is also included in the project.
More than four hundred Department of Education civil servants currently work at Mowden Hall in Darlington.
In November,the department said that the poor state of repair of Mowden Hall meant a new site was needed.
In the same letter the department raised the possibility that the jobs could be relocated to Newcastle if nothing suitable was found in Darlington.
The town's MP Jenny Chapman has told ministers that this is the most vital issue facing Darlington, with the four hundred jobs generating an estimated £21 million to the local economy.
In reply the Education Minister Liz Truss said that no final decision had been taken and that she was aware of the importance of the jobs to Darlington.