The scheme's original backers pulled out in 2008
Councillors in Cumbria and the supermarket giant Sainsbury's have signed a legal agreement over the redevelopment of Penrith town centre.
The original New Squares scheme - featuring homes, shops and a car park - hit problems in 2008 when its Australian backers pulled out.
The scaled-down plans are for a superstore, car park, retail link and housing, to be completed in two years.
A retail area around Common Garden Square will be finished in five years.
It is hoped work can start on the site by the end of the year.
Councillor Gordon Nicolson, leader of Eden District Council, said: "I am delighted with the outcome of the negotiations which means that the stalled scheme can now move forward."