Land at Eastside formerly earmarked for the new Library of Birmingham is likely to be snapped up by the University of Central England.
The city council cabinet is considering a land-swap scheme which would see the UCE move the Conservatoire and the Institute of Art and Design from its city centre Paradise Circus site to Eastside.
In return, the council would acquire UCE land in preparation for the £1 billion redevelopment of Paradise Circus. The new library, which was to have been built on part on Eastside, will now be at Centenary Square.
Ken Hardeman, council cabinet member for regeneration, said: "The UCE taking on this site would be a win-win situation for everyone.
"It would give a boost to our Westend strategy aimed at continuing the regeneration of the west side of the city begun by the building of the ICC and Brindleyplace, and it would add to the expansion of education and learning in Eastside.
"The whole thing has worked out fabulously and is another example of Eastside going forward."
UCE vice-chancellor Peter Knight said: "Moving the Conservatoire and the Institute of Art and Design to this site would complement investment already made in Eastside.
"We have already relocated the Technology Innovation Centre to Millennium Point and are in the process of relocating the Birmingham School of Acting to Millennium Point.
" Locating two more centres in Eastside would consolidate our land holdings in this up-and-coming area of the city. I hope that continued negotiations will bring benefits to all parties."
Because the former library site is not being developed as originally planned, the council will have to repay a £3.4 million European Regional Development Fund grant. Educational institutions do not qualify for ERDF grant. Coun Hardeman (Con Brand-wood) said the grant loss would be more than offset when the rest of the site, next to the Birmingham to London railway, is disposed of for mixed-use schemes.
"The interest in land at Eastside is considerable and we will not have any difficulty in disposing of sites.
"The land will gain in value as neighbouring development schemes are advanced," Coun Hardeman added.