Adur District Council purchased the site in North Road for £850,000 last month.
It has committed a further £200,000 in order to bring forward viable proposals.
The council said that, due to the site’s prominence and importance, it would carry out wider community and stakeholder engagement so that residents have a say in the future of the area.
Options for the site could include retail, residential, medical or a community hub.
Planning permission will be required before any works go ahead.
The plans form part of the authority’s wider programme to support the regeneration of its town and village centres.
Councillor Carson Albury, Adur’s Executive Member for Customer Services, approved the purchase of the site.
He said: “I’m very pleased to be able to say we have purchased this prominent site which has been empty for too long.
“We will be undertaking a full and thorough consultation with the people of Lancing to find out what potential uses for the site would best serve the community and I believe this is a great move for the area.
“The Council will bring together various stakeholders who are interested in investing in the village and further redevelopment such as this will help to breathe new life into Lancing Village Centre.”