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Labour Councillor Al Garthwaite, who represents the Headingley and Hyde Park ward, said the council is willing to replace and fund a permanent plaque for Miss Hill, with the permission of her family.
Sutcliffe, who was serving a life term for murdering 13 women across Yorkshire and the North West between 1975 and 1980, died on November 13, 2020, at the age of 74, after testing positive for Covid-19.
The serial killer avoided detection for years due to a series of missed opportunities by the police.
He eventually confessed in 1981 after he was caught in Sheffield.
Despite his 24-hour-long confession to the killings, Sutcliffe denied the murders when he appeared in court.