A development which will create 480 homes and up to 80,000 sqm of office space is set to go ahead following an agreement between Network Rail and the City of York Council.

Both organisations have signed a Memorandum of Understanding (MoU) for York Central, a 35 hectare site which is behind the city's railway station and owned by the rail firm.

Kersten England, chief executive of City of York Council, said: "This agreement is a major milestone in a relationship that we have been developing with Network Rail over the past three and a half years. It signals a significant turning point in both the site's history, as well as the city's. It builds on the momentum for brownfield site development seen in Hungate and on the Terry's site both already in development.

"The site will offer the city an opportunity to address the acute, growing shortage of high-quality office space, as well as addressing the severe challenges the city faces in providing homes for York residents."

The two partners have been working since last year to develop an initial masterplan for the site, as well as working to attract major funding from central Government for critical infrastructure to the site.

To date, £27m has been raised for transport infrastructure in and around the site and Station Gateway from the West Yorkshire Plus Transport Fund, and £1.65m for site remediation from the Leeds City Region Local Growth Fund.

Development has begun on the site with the opening of Network Rail's £36m Workforce Development Centre and Rail Operating Centre earlier this year.

Phil Verster, managing director for Network Rail's LNE & EM route, said: "This is a very positive step towards developing this challenging site. We have been working hard with City of York Council to produce a plan which will allow phased and achievable development, and which uses this large piece of land to maximum benefit for York residents and businesses alike."

The aim is to start the first phase of works on the site in 2015.