The news comes following the latest in a series of engagement events with the public about the Finchfield site earlier this month.
The Wolverhampton Environment Centre, which consists of land off Westacre Crescent, currently hosts four large derelict glass houses, areas for plant growing and a bungalow, which are not viable to bring back into use.
The proposed scheme would see the demolition of the glass houses and sensitive development - in fitting with the character of the surrounding environment - of up to 14, 2, 3 and 4 bedroom homes on the part of the site occupied by the derelict buildings, which makes up less than 10% of the area.
The remainder of the land will be dedicated to wildlife and opened up to the public as part of the adjoining Smestow Valley Local Nature Reserve (LNR).
Councillor Peter Bilson, Deputy Leader and Cabinet Member for City Assets, said: "We have worked closely with the Tettenhall Neighbourhood Plan Steering Group and Finchfield and Castlecroft Community Association to get to this stage.
"The small mixed housing development will support local housing needs and will be designed sensitively to fit in with the surroundings.
"The vast majority of the land will be turned into a first class managed nature reserve for residents and the wider public to enjoy in line with the Tettenhall Neighbourhood Plan.
"A proposed ERDF Blue Network Grant of £285,000 will help us improve the area being transferred to the Local Nature Reserve.
"Making the land a local nature reserve indefinitely will doubly protect it against being built on by developers and preserve it for future generations to enjoy."
The local nature reserve will include woodland and pond management, meadow creation, car parking for walkers, self-managed allotments with parking spaces, new paths throughout to connect it to the wider Smestow Valley LNR, and new entrances from the disused railway line pathway into the reserve.
- released: Friday 30 June, 2017