Coventry will re-open talks in the New Year about returning to the Ricoh Arena next season.
The Championship Sky Blues are tenants at Birmingham City again this season for a second campaign and visit Derby on Tuesday night.
The former FA Cup winners have been embroiled in protracted stand-off with Ricoh Arena owners Wasps over a new lease for the football club.
City have a clause in their St Andrew’s arrangement to extend the deal for another season if both clubs wish.
But Mirror Sport understands there has been progress between cash-strapped rugby club Wasps and Coventry over ending their row.
Wasps were struggling financially before the pandemic after making a £5million loss in the second half of 2019.
The rugby club’s parent company has since admitted it is unlikely to meet all of its financial obligations due to the “significant impact” of the coronavirus outbreak.
Coventry City officials are now increasingly hopeful of securing a new lease for 2021/2022 back in the city.
The Sky Blues averaged 12,363 home crowds previously at the Ricoh with just over 7,000 season ticket holders.
But attendances last season dropped to an average of around 6,000 at St Andrew’s before the pandemic.
Long-term Coventry want to own their own ground and have plans for a new environmentally friendly stadium at the University of Warwick.
The university have allocated an agricultural site on its main campus at the southwest edge of Coventry.
The club will own and be responsible for the cost of the stadium and receive all the revenues it generates but plans are only at an early stage.
Coventry are 20th in the Championship after winning League One last year.