The Moorings in Ratho will be increased in size to fund the development of the tree-lined docking area at the basin of the Union Canal.
Cala Homes has already constructed half of the 100 homes planned for the upmarket development, which has a completion date of 2014.
The Edinburgh-based housing giant had intended to fund the completion of the marina area with the sale of an 84-bed care home site.
However, despite being on the market since September 2010 the site remains unsold and the firm will instead build 14 new luxury homes to generate the funds required to allow the basin to be completed.
Scottish Canals, which promotes Scotland’s waterways, said the investment would result in 20 new berths for vessels and would help turn the area into a visitor destination.
Development manager Jamie Woodfield said the alternative plan to extend the village would ensure the construction of a new canal basin.
He said: “The canal is a great asset to Edinburgh, and the east of Scotland. With Cala’s development plans and the creation of 20 canal berths, Ratho will continue to be a highly desirable spot which will go from strength to strength over coming years.
“These development proposals will help the Union Canal to become more established as an attractive destination, not just for leisure, but also as a vibrant and integrated community.”
To date 50 homes have been built, with 48 sold and 38 currently occupied.
The firm will showcase the plans at a public exhibition this weekend.
Speaking in advance of the event, Cala’s land director Derek Lawson said the firm was pushing ahead with the alternative plan to ensure it could meet the 2014 completion date.
He said: “We have taken stock of current market conditions, and our agents tell us that there is little prospect of achieving a sale in the foreseeable future. We therefore need to create alternative value, and given the success of The Mooring, residential is the obvious choice.
“The new homes phase now presents the most viable option of securing essential funding for the canal basin.”
It is intended that Ratho will be branded a “canal village”, with new efforts to link up with facilities such as the Edinburgh International Climbing Arena.
City leaders have been working with British Waterways Scotland in recent years to transform Edinburgh’s 16km of canal.
Cala’s consultation event will take place at the Bridge Inn, Ratho from 1-6pm tomorrow and 10am-1pm on Saturday.