Strut House in Lincoln is described as an 'outstanding' short breaks home for some of the county's most vulnerable children.
Under the proposals, it will relocate to a former residential building at St Francis Special School. There will be a full refurbishment, which will provide more modern and spacious facilities that will meet the diverse needs of children and young people who have severe and profound disabilities.
Once vacated, there are plans for Strut House's former building to be converted into a new children's home, helping to ensure that those that require this specialist care can be provided within the county.
The proposal is expected to create new jobs at both facilities, and building work is expected to begin later this year - subject to approval.
Councillor Patricia Bradwell OBE, executive member for Lincolnshire County Council's children's services, said: "It's very important to us that we can provide the right support to the county's vulnerable children. We also want to ensure these young people can be supported within their local community, so they can remain close to their family and friends.
"These improved facilities will mean Strut House can better support children with complex and significant special needs and disabilities. In addition, many of the children are on the roll at St Francis, and the relocation will enable greater partnership working between Strut House and the school, with shared facilities and a better transition for the young people.
"Alongside the new children's home, the end result will be increased and much improved support for some of our most vulnerable youngsters and their families."
A planning application is due to be submitted in the summer, and, if successful, the proposals will be discussed by the council's children's and young people scrutiny committee later this year, after which a final decision will be taken by the council leader and executive councillor for children's services.
It is proposed that Strut House will relocate to its new home in spring 2022, with the new children's home opening in the following months.