Weston & Co Publishing's land in Shoalhaven St, when combined with the adjoining council-owned Akuna St car park, had long been identified as a key strategic site by the council, with both properties previously the subject of multimillion-dollar offers.

But multiple attempts to activate the area with a commercial development had fallen flat.

The most recent was in March this year when negotiations between developer Winston Langley Burlington and Westons to buy the Shoalhaven St property stalled.

By purchasing the 1915sqm Weston property, the council will be the sole owner of a 5152sqm development site.

The price the council paid will remain confidential "due to the commercial implications with any future negotiations".

Kiama council's acting general manager Bryan Whittaker said the area had been identified as a key strategic site in 2002.

"The properties at the rear of Terralong St were identified as key for additional parking and also for access through to Terralong St," Mr Whittaker said.

"Also it provides a site that in combination with our council car park could enable a future mixed-use development, which might provide for another supermarket, other specialty shops and a residential component.

"Having the council own both sites is a good investment ... having the one owner of the land obviously makes developing it easier."

The council intends to classify the land as operational and may then put the site out for expressions of interest.

Councillor Warren Steel said he was "ecstatic" with the outcome. "We had to do it, bite the bullet," he said. "That is what the people expect of us.

"Personally, I would like to see a Coles or even an Aldi, just so we can have some competition."

Cr Steel said the concept of council buying key property sites and then putting them out to tender could also solve the ongoing problem of Kiama's shortage of petrol stations.

Kiama Mayor Sandra McCarthy also welcomed the purchase, which was made after numerous confidential meetings.