A huge supermarket is planned for the Welton, Bibby and Baron factory site in Midsomer Norton.
The 12-acre plot has been acquired by the Terrace Hill Group which is seeking permission for a mixed-use scheme comprising a 50,000sq ft food store and six acres of residential housing.
The land has been conditionally bought from the paper bag manufacturer, which is relocating to new premises in Wiltshire.
Adam Pratt, development director at Terrace Hill, said: "We have exchanged contracts to purchase the Welton Bibby and Baron site on Station Road, Midsomer Norton.
"We are working on the masterplan which will include new housing and a food store, creating 350 replacement jobs and homes for local people."
Mr Pratt described the proposal as an "exciting opportunity for the town".
He added: "From preliminary meetings with councillors we understand that in addition to the jobs created, there is the potential to bring many other benefits. These include new pedestrian links to the High Street; enhancements to the gateway to the town centre; and improvements to highways.
"We will be holding a public consultation event to gain a further understanding of public opinion in due course."
The consultation is expected to take place soon with a planning application submitted to Bath and North East Somerset Council by the spring.
Terrace Hill Group manages a commercial development programme and a commercial investment portfolio and promises to try to give shareholders "above average returns through its property skills and expertise and rigorous management of risk".
The proposal has been met with concern from councillors, who have held meetings with Terrace Hill to discuss the plans.
Councillor Barry Macrae (Con, Midsomer Norton North) argued that the land could be better used to provide employment to help compensate for the jobs that have moved out of the town with Welton, Bibby and Baron.
Mr Macrae said: "What we need are more well-paid, full-time local jobs, not yet another application for a huge supermarket on employment land.
"We have argued for many years that more local employment must be the top priority to help reduce the high levels of out-commuting from our town."
He agreed there was a need for housing and that brownfield should be a priority over greenfield sites but said the creation of jobs must go hand in hand with that of new homes and cast doubt on whether a supermarket would deliver the number of full-time jobs needed.
Mr Macrae said he had seen initial plans which he described as "crass in the extreme". He said it showed plans with what he called a "shed in the middle".
He suggested planners go back to the drawing board and consider what residents suggested during consultations on long-term planning for the town.
It is not known which supermarket is interested in being part of the development, although both Asda and Morrisons have been suggested.