It's believed the TAFE building on William Street and former Clancy Motors site on Howick Street are two locations being considered for a new campus, though CSU will also keep its current site on Panorama Avenue.

The TAFE building, in particular, has been the subject of much debate since Bathurst Regional Council took over ownership from the state government in 2013.

Council commissioned a conservation management plan in 2015 to look at options with museums, retail, office space and cafes considered, but the prospect of CSU moving in might trump them all.

As a first step, council has accepted CSU's offer of a $100,000 contribution towards developing a Town Square Master Plan, with council likely to contribute a similar amount.

The director of the university's Office of Strategic Planning and Information, David Bedwell, addressed council on Wednesday night saying CSU believed the proposal could revitalise the CBD.

"Many university campuses across Australia that have campuses that are in outer suburbs or out of town are moving into CBD locations to transform not just their campuses to get more students to help them grow but also to change the city that they are in," he said.

"... We see a vibrant new CBD precinct that builds upon all this city's heritage because that, as well as tourism, is attractive to students from outside the region.

"We see a CBD that has cultural and community stuff, it's got commercial and retail, it's got business and innovation and it could have research and education in the middle of it as well, and the advantages that come with that."

Mr Bedwell conceded the plan was still in its very early stages but said CSU believed a presence in the CBD would "attract students to the region [and] keep students from leaving the region".

"We think that it will integrate the university with the city and, further, it will help council's economic, cultural and other plans," he said.

"We also think it will activate and transform the CBD."

Council general manager David Sherley said council was "supportive of the CSU proposal to develop a town square management plan" that would consider a CBD presence for the university.

"The council looks forward to working with CSU and the community, including the town square group, on this project," he said.

The town square is bounded by Howick, William, Russell and George streets.