The company had been eyeing up the giant unit - last occupied by Fabb Sofas - as its 21st Lancashire outlet, but only if it could expand the amount of space allowed for groceries.
Now Town Hall officers have recommended that South Ribble planning committee should agree a ten-fold increase in the food retail area at its meeting next week.
If approved it would open the door for Home Bargains to take over a store which has stood empty for more than three years.
The huge building, owned by the Royal London UK Estate Fund, is currently limited to just 93 square metres of food sales under planning permission given to Tesco when it took it over from the original tenant MFI in 2007.
The Tesco store was primarily a homewares unit, with only a small fraction of floorspace given to grocery sales.
The latest application, which is expected to get the nod next Thursday, would see that restriction lifted to 980 square metres - around 30 per cent of the total area of the shop - keeping it within the limits set by the South Ribble Local Plan to protect existing food retail stores.
"The nature of business of the prospective operator (Home Bargains), together with other similar discount/value stores, is wholly different to food retail stores," says a report to go before the planning committee.
"Officers are satisfied that Home Bargains, or any other discount/value store operating with a restriction up to 30 per cent ground floor area for food retail, would not constitute a food retail outlet.
"As such the proposed variation of condition does not conflict with the South Ribble Local Plan and would in fact bring a long-term vacant unit back into use, adding to the range and variety of uses within the Capitol Centre site."
Tesco replaced doomed furniture retailer MFI in the unit in 2007, extended it and remained there until the supermarket giant closed it down in June 2015 with a loss of 87 jobs.
Fabb Sofas took over in May 2017, but soon hit trouble and went into administration in June 2018. The building has stood empty since then.
In the application to South Ribble the owners say that while Home Bargains sells a range of food and drink, the company is mainly a non-food discount retailer and does not operate primarily as a food store like the nearby Waitrose supermarket.
They are asking the council for more “flexibility” to have up to almost 1,000 square metres of food space to offer its customers the range of products it provides in other stores across the county.
If approved the new store will add to the growing portfolio of Home Bargains outlets in Lancashire.
The chain already has two stores in Preston - in Market Place and Deepdale Road - and there is a third in Towngate, Leyland which was opened with £1m investment in October.
The Walton-le-Dale news comes just days after the company announced it is planning to open in Chorley's Alliance Retail Park.