The move will be part of Angus Council's house building programme.
Camus House will soon be vacated by its residents who are moving to the new Kinloch Care Centre.
Following a meeting on 28 February, the Neighbourhood Services Committee agreed to seek to use the site to build 12 new affordable council houses for rent.
In an additional partnership arrangement with the charity Houses For Heroes Scotland, a section of the site will be allocated for a further five houses. These will be wheelchair-adapted houses for ex-services personnel.
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There may also be opportunities to house people with learning disabilities on the site, where practicable and resources allow.
Convener Councillor Donald Morrison said: "This is a great opportunity for us to build a dozen more much-needed one and two bedroomed council houses for rent, as part of our council house building programme.
"In addition, Houses for Heroes will be able to provide adapted houses in a central location, to assist ex-services clients to make a transition from military to civilian life and integrate into the community."
The site will be developed as one contract to ensure consistency of design and energy efficiency. The five adapted houses will be transferred on completion at an agreed cost to Houses for Heroes, and the site leased to them, at a peppercorn rent, for 100 years.
A strip of the Camus House site may also be offered to neighbouring residents to purchase, to gain access to the rear of their properties.
(JP)
