The former site of Aberdeen's Craiginches prison could be used to offer affordable homes to health workers.
Craiginches opened in the 19th Century but, along with Peterhead Prison, closed to make way for the new HMP Grampian in Peterhead.
The site could be jail sold to Sanctuary Scotland Housing Association.
The high cost of living in Aberdeen has seen the public sector struggle to recruit and retain staff.
The proposals would see Sanctuary Scotland receive financial backing from the Scottish government.
Affordable homes are set to made available, in particular to NHS staff, as part of a pilot scheme to ensure those in the public sector are given access to cheaper accommodation.
The city council and NHS Grampian have welcomed the initiative.
There have been calls in recent months for the wages of nurses and teachers in Aberdeen to be 'weighted' - to reflect the high cost of living in Europe's oil capital.