PART of the Prison estate around Newport could be taken over by the Isle of Wight Council so much-needed infrastructure work can go ahead.
The plans, however, do not include the sale of the now unused Camp Hill prison.
The Ministry of Justice (MOJ) is looking to transfer the ownership, liabilities and future management of the highways to the council, paying the authority a one-off fee to take it off its hands.
Roads, pavements, grass verges and other amenity areas would be included in the package.
It would mean the council would have the cash to bring the areas up to an acceptable, safe standard.
The MOJ has also offered a sum for improving the roads it would keep, as they have been defined as essential for operational reasons.
How much the MOJ is willing to pay the council is unknown as the government department deems it commercially confidential.
The regeneration of the area has stalled on several occasions through a lack of government investment but improvements to the St Mary's junction were funded and completed with potential housing at Camp Hill in mind.
The latest plans for the site proposed turning the area into a garden village, including 1,750 houses, a local centre, healthcare, education and public open spaces.
The bid was unsuccessful because it was considered the infrastructure costs were prohibitive. Larger housing projects on the mainland with lower costs were awarded the funding instead.
While Camp Hill prison is not included in the proposed land transfers, the council has said the offer can be viewed as another step to 'de-risk' the site, enabling future negotiations and master planning to take place.
Feedback from residents so far, the council say, has been supportive.
One of the main financial risks, reports say, is the future maintenance costs due to the 'non-standard construction' of the road network, which means it is not feasible to bring the whole of the Parkhurst estate up to the standard in the Highways PFI contract.
As the legal negotiations continue, officers say a balance needs to be struck between the potential risks in taking ownership and responsibility against the benefits to residents.
The Isle of Wight Council's cabinet will make the final decision on the offer from the MOJ at its meeting next week (March 11), in private session as they will discuss confidential matters.
The decision needs to be made, with land transferred and monies paid, by the MOJ deadline of March 31.
An Isle of Wight Council spokesperson said: "The highways and footways are in a poor state of repair and local residents have wanted to see improvements made for some considerable time.
"The council, as highways authority, is better placed to oversee the repairs."
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