Sources say Tesco, whose motto is Every Little Helps, is in detailed discussions with Scottish and Newcastle, owners of the Berkshire Brewery site at Worton Grange, near Junction 11 of the M4. The brewery closed last year.
The development would be a huge boost for the local economy and would provide entry level jobs for people in areas such as neighbouring Whitley, which is among the 10% most disadvantaged in the country.
Whitley councillor Rachel Eden said: "As ward councillors we'll be looking at any proposals for the development of the site very carefully for the effect on local jobs, how it will affect amenities for Whitley and sustainability."
The plan would be to build 700,000 sq ft warehousing on the 58-acre plot where the former Courage Brewery site, the last of Reading's famous Three Bs, closed its doors in April following in the footsteps of biscuit maker Huntley and Palmers and bulb growers Sutton Seeds Bulbs. The closure of the brewery last year costs 362 jobs.
Reports from the city this week say Tesco is close to acquiring the site for around £40m.