Council officials are recommending all 64 homes on Gorebridge’s Newbyres Crescent estate are demolished before a special gas membrane is installed at the site.
The plan is then to rebuild the development.
Midlothian councillors are due to make a decision on the recommendations at a council meeting on Tuesday.
If the proposals get the go ahead then residents in the council estate would be relocated for up to six months.
The £6m development was built eight years ago. It has been estimated that to build a new development would cost £12m.
The problem first came to light when a family had difficulty waking teenagers sleeping in one of the homes on the site last September.
A Midlothian Council spokesman told the BBC: “We are exploring a number of options, and this work will accelerate once the detail around the final choice on what work will be happening is clear.”