St Albans District Council is considering compulsory purchase of a row of rundown houses and buildings owned by Tesco if the retailer fails to submit a planning application by Christmas.
Tesco has owned the properties for five years but its plan for a store has been thwarted by Esso, which has refused to sell a petrol station on the edge of the site.
Tesco only has one small store in the town at present.St Albans District Council planning portfolio holder, councillor Chris Brazier, said: "If people leave properties to go to ruin, we are entitled to do them up so they can be used as homes."
Tesco last month asked the council to use compulsory purchase to buy the petrol station. It refused.
Meanwhile, a report by North Norfolk District Council into a 2003 land deal agreement with Tesco has attacked a process that failed to keep councillors informed of negotiations.
Councillors dealing with a Tesco scheme were unaware of a property deal that stopped the council promoting development of a rival store, according to the report. Talks between the council and Tesco were kept "within a small circle of members and officers". There was "no impropriety but confidentiality was taken to an extreme".
The report has been sent to Tesco&'s lawyers as well as the Audit Commission and will be sent to the Local Government Ombudsman, who will decide whether to carry out an investigation.
A spokeswoman for Tesco said that it had told the council to publish the report as it wanted to be transparent. "This was a normal straightforward property deal; nothing was done that was secretive."
She said it was also very hopeful that a deal would be struck with Esso in St Albans as it was "very eager to get things going".