Woolworths plans to open a new supermarket complex in Wellington Street in Launceston next year.
The supermarket giant proposes a 3800-square-metre supermarket above a 160-lot underground car park on a commercial block between York and Elizabeth streets next to the Cock 'N' Bull hotel.
The development will house small ancillary shops and cafes.
Woolworths corporate affairs manager Luke Schepen said the development would create 125 new retail jobs.
``We've had some initial discussions with council and we're currently working through our plans,'' Mr Schepen said.
``We will lodge our application with council in due course and with everything going to plan we'd hope to start construction in the new year.''
An application has been lodged with the Tasmanian Planning Commission to amend the city's interim planning scheme to remove restrictions on floor areas for supermarkets under the scheme's new urban mixed use zone to allow for the development.
The Launceston City Council will provide a statement of support to the commission for the amendment.
P. A. Williams and Associates owns all but two titles of land in the city block bordered by Wellington, York, Elizabeth and Bathurst streets, which adds up to 10,067 square-metres of prime commercial property.
It does not own BBQs Galore and will not include two small heritage-listed properties on the corner of York and Bathurst streets in the development.
Launceston firm GHD has prepared a report for P. A. Williams and Associates to the planning commission.
The report suggested the supermarket development was suitable for the city as it supports the council's focus on inner city living and will improve activity in the retail core, extending activity beyond normal business hours.
It said due to the heritage nature of Launceston, it was a rare opportunity to find such a large site that had so few development restrictions in close proximity to the CBD.
The new supermarket would be placed 450 metres from the Coles Wellington Street supermarket and 700 metres from the Coles Charles Street supermarket.