St. John's city council has suspended condo plans for a grassy hill at the entrance to Quidi Vidi village.
Powderhouse Hill Investments wants to put 10 two-storey houses at the site, known locally as School House Hill.
But at Monday's council meeting, councillors voted to consider buying the land instead.
"[To] review that option of acquiring the land, we would need to maintain the green space and putting some definition around what can actually be permitted as roadside housing," said Deputy Mayor Shannie Duff.
"In other words, to maintain the integrity of that village according to what was approved in the Quidi Vidi Development Plan."
This is the second time that Powderhouse has submitted development plans for the area.
The company had plans for a five-storey condo building at the site, but withdrew the bid in May following an outcry from local residents.