A new school will welcome pupils with social, emotional and mental health needs.
Melksham House is expected to open next year as a primary school.
It follows an earlier announcement there will be a 130-pupil school in Wiltshire for students with special educational needs.
Silverwood School is also having an additional investment to extend the existing campus to provide a high quality provision for 350 pupils.
The council’s business case estimated that there would be significant annual revenue savings in the process, meaning money could be re-invested into key services.
This project marks another significant investment into Melksham, following last year’s opening of the Melksham Community Campus.
Wiltshire Council has formally notified Melksham Town Council of the plans and will also look to have constructive dialogue with them soon on the future of the old Blue Pool site.
Councillor Laura Mayes, cabinet member for education and skills, said: “Nationally there is a rise in the need for special educational needs places and Wiltshire is no different.
“We are looking at long term provision across the county which will meet the need and I’m pleased we can turn this Melksham landmark into something which is truly inspirational and will provide an amazing space for all pupils.”
Councillor Jane Davies, cabinet member for special educational needs, added: “All children have a right to an education which can help them fulfil their potential in an environment which works best for them and helps them to thrive.
“Our business plan specifically states we will find the right specialist support for children with special educational needs.”