The historic Fort Largs site at Taperoo is to be handed over to the National Trust instead of being sold as initially planned, with land next to it to be redeveloped into housing.

AV Jennings has been named as the preferred developer to build 250 two and three-storey homes on seven hectares of land, but the sale price has yet to be disclosed.

South Australia's Infrastructure Minister Stephen Mullighan said the National Trust would be gifted ownership of the historic fort, with taxpayer funding to be provided to repair it.

"We couldn't think of anyone better who could do this facility the justice it deserves, returning it to its former glory [and] also making sure the different elements of its heritage are retained and preserved," he said.

The historic defence fort was built in the late 1800s to protect Port Adelaide's coast.

It became a police training facility in 1961, before police vacated it several years ago and moved to a nearby site.

Heritage enthusiasts have been worried about conservation of the fort since the State Government announced its intentions to sell the site.

The developer plans to reuse the drill hall as a community facility and the old police barracks will be turned into apartments, but the historic defence installations will be preserved.

The plan for the Fort Largs site, with the historic fort in the bottom right corner. ( Supplied )

National Trust says fort will need taxpayer funding

National Trust president Norman Etherington said the group eventually wanted to open the fort to the public, with a cafe possible as part of the revamp.

"This is just not significant for South Australia. It's for the whole nation of Australia," he said.

"It's the last important defence site from the 19th century [that can] be developed and made accessible for public use."

But Mr Etherington said the fort had been neglected and the organisation was keen to know how much taxpayer support would be provided.

"How you can make this a sustainable business over the decades to come — that's the challenge and that's the first priority," he said.

Mr Mullighan said the Government was prepared to make a "significant contribution" but would wait for the National Trust to assess the site and estimate the cost of repairs.

About 100 jobs are expected to be created as part of the housing construction.

AV Jennings state general manager Brian Virgo said he expected strong home sales, especially after the announcement that 12 new submarines would be built nearby at Osborne.

"We did joke a moment ago that we should put a French patisserie here that we think would work very well," he said.