The government has agreed to contribute funding as part of the myplace programme, following a review of public spending.
An all-weather synthetic sports pitch and an indoor facility for dance and performing arts are proposed as part of the U-Mix centre.
In March 2009, the previous government earmarked £2m towards the scheme but it is not yet known the level of support it will now receive.
Sheffield City Council (SCC) cabinet member for children and young people's services Colin Ross, said: "We are very pleased with this announcement.
"We are now able to go ahead with this scheme and we hope we are given the full funding we were promised to get this up and running."
In August, Leisure Opportunities reported that the Football Foundation had confirmed a £350,000 grant towards the scheme.
SCC is working alongside Football Unites Against Racism, Sheffield Futures and Lowfield Primary School on the plans.