Revised plans have been lodged by Wrenbridge and Buccleuch Property, working in partnership with Scarborough Borough Council.
They include new retail units on the ground floor and accommodation for 50 doctors and nurses from Scarborough Hospital and 150 university students on the upper floors.
The scheme has been developed with CU Scarborough, part of the Coventry University Group, alongside consultation with the York and Scarborough Teaching Hospitals NHS Foundation Trust, which runs Scarborough Hospital.
The council is also putting forward plans to enhance the public realm next to this site, which will further improve the area.
A spokesperson for Wrenbridge and Buccleuch Property said: “These plans represent a major investment and regeneration in Scarborough town centre and the changes we’ve made ensure it will fit in with the historic town centre.
“Delivering this development will help the hospital attract doctors and nurses and will also create good quality accommodation for students. It is an opportunity for town centre improvement that should not be missed.”
Earlier this month a motion for a full review of authority’s 2019 decision to replace the former Argos building with the £22m accommodation scheme was defeated by councillors.
A Scarborough Borough Council spokesperon said: "Due to the closeness of the vote and the seriousness of the issues and concerns raised by councillors at the meeting, our council leader and the leader of the group that proposed the motion have agreed to implement a review.
"A detailed report will be taken to our places and futures overview and scrutiny committee on Wednesday, October 27."
Polly McMeekin, Director of Workforce and Organisational Development at York and Scarborough Teaching Hospitals NHS Foundation Trust, said: “Good quality, affordable housing for NHS staff on the doorstep to the hospital is essential in helping us recruit and retain qualified doctors, nurses and healthcare professions to the East Coast.”
CU Scarborough Associate Pro-Vice-Chancellor Jackie Mathers said: “To help build a resilient and growing economy in the area, employers need to able to encourage young people to move into and stay in the area through training and job opportunities – and this development will support that.
“We have built a number of strong relationships with local employers to understand the skills gaps and future opportunities that exist. We work closely with the NHS and have been successful in training nurses who now work in the local NHS Trusts.
“We can do more for the area if we can attract more UK and international students to Scarborough, to study our degrees such as teaching, policing and acting, as well as cyber security, which is one of the fastest growing sectors in the UK economy and a key focus for the region.
“We believe that growth for CU Scarborough means growth for Scarborough and this development is a vital stepping stone towards both of those aims.”
A planning application was initially submitted in 2020.