The deadline for applications has passed and it's understood the ACT government is now discussing the detail of what will become of the two big blocks in Turner and Braddon. An announcement could come within weeks.

The plan is to use the 39,000 square metre plots straddling Northbourne Avenue for a high-density up-market residential complex, with buildings rising to 25 metres in height.

As demolition proceeds, three underground gas tanks have been found on the site but their removal is not expected to derail the sale.

Some gas contaminated the soil but the authorities say this will be cleared.

Demand for development land in Canberra is high as the city grows. In Sydney, for example, the property market is faltering with falling prices in some parts but in Canberra it seems resilient.

The demolition of the previous public housing on either side of Northbourne Avenue has been going on since last September. It's now in its final stages, at a total estimated cost of $6.8 million.

The flats were built in the 1950s in response to a high demand for housing for public servants in Canberra but had fallen into disrepair in recent times.

With the light-rail taking trams down the grand avenue, the plan is to have hubs of apartments around stations. The plan is for a run-down area to be replaced by a glossier complex.

Tender documents described Northbourne Avenue as the most significant approach route to the city and one of the most important streets in Canberra. They envisaged new "urban villages" centred on light rail stops in the corridor.

Last year, the City Renewal Authority chief executive Malcolm Snow said the redevelopment of the former Northbourne Flats sites would set a benchmark for the transformation of Northbourne Avenue as one of the exciting renewal areas in Australia.

"The replacement of the outdated public housing along the corridor is central to the government’s vision for Northbourne Avenue and will make a significant contribution to the City Renewal Authority’s renewal program," Mr Snow said.