The city has agreed to buy a state building on Morton Street for a school – settling a major sticking point in a nearby land use battle over the former St. Vincent’s Hospital, The Post has learned.

City Council Speaker Christine Quinn – whose district includes the West Village – negotiated with the Bloomberg Administration to purchase the state-owned structure to appease parents in the neighborhood. She will announce the deal this afternoon, sources said.

The Council’s Land Use Committee today also approved a modified plan for the former hospital in an attempt to satisfy residents angry over a plan to build condos where the medical center used to operate.

The new plan includes 350 condo units instead of 450 and 95 parking spaces instead of 152. The developer – Bill Rudin – also agreed to a park and playground at the corner of 12th Street and 7th Avenue near Greenwich Street.

Residents wanted a new hospital but that was not feasible, said Zoning Committee Chairman Mark Weprin (D-Queens) who voted for this plan.

“I’d love a hospital too and so would the Rudins like a hospital but they’re not in the hospital business and nobody (is) coming forward to build a hospital there,” Weprin said. “It is a compromise. Nobody is thrilled, which is generally the sign of a good compromise.”

The agreement will go before the full Council in several weeks, Weprin said.