Rye and Rother councillor Sam Souster believes the now freed-up Lower School site could be used for the Rye Academy to expand.
The Academy, which incorporates Rye Primary School, Rye College and Rye Studio School is looking to establish a new Studio School and is short of space.
Cllr Souster said: “The site was on Rother District Council’s Local Plan for housing. East Sussex County Council ignored this and Tesco were interested.
“Negotiations went on for a very long time. It has not been explained what went wrong, but it became available again and Sainsbury acquired the site, but unfortunately not the access which Tesco obtained. This stalemate has gone on for four years.
“Rye desperately needs a quality supermarket, but the town views were very much against that location, mainly because of the closeness of the railway level crossing and the fire station. This has caused a lot of frustration.
“Personally my preference for the future ownership would be to see the land utilised by Rye Academy, as it was educational land in the first place, or for housing development, as defined in the local plan.
“Housing though is not now essential as it was at the time of the disposal, because Valley Park, just up the road, will produce on completion some 150 dwellings.”
Rye MP Amber Rudd commented: “I am pleased that the stalemate will now come to an end and the land can be put to good use, I have been pushing for a resolution for a long time.
“It was disappointing to see the stand-off go on for so long, but I am confident that the sale of the land as one package will mean that we will not have the situation repeat itself.
“I hope that the supermarkets will think carefully about who the land is sold to and that people in Rye have the opportunity to give their views as it is important to have a positive development of the site which benefits the community in Rye, as soon as possible.”