Gloucestershire Police said they had found evidence that a body could be buried within The Clean Plate café in Southgate Street, Gloucester, and are linking it to the disappearance of 15-year-old Mary Bastholm.
Mary was reported missing on January 6, 1968 and has never been found.
Serial killer West, who died in prison in 1995 aged 53, was previously suspected over her disappearance.
Gloucestershire Police said its Major Crime Investigation Team has deemed that further assessments are required at the cafe in order to determine whether an excavation is necessary, with officers expected to be at the scene for a number of weeks.
Family liaison officers have now been put in place to provide support and updates to Mary’s family.
Assistant Chief Constable Craig Holden said: “This could be a significant development on a case which has gained a lot of public interest over the years.
“On the basis of the information provided to us, we consider this to be new and potentially important evidence in the case of Mary Bastholm, however further detailed assessments will take place over the following few days to determine the extent of excavation needed.
“First and foremost, our thoughts are with Mary’s family and we would ask that their privacy is respected at this difficult time.
“This news may understandably alarm those who work near to the premises, as well as those in the wider Gloucester community and beyond.
“The Constabulary has always said any fresh evidence would be reviewed.
“This has happened and a focussed and proportionate investigation will now take place.”
He added: “Due to the potential scale of this there will likely be some disruption to those who work nearby, and I ask for their patience and co-operation during this time.
“We will have local officers in the area and a visible police presence at the location possibly for a number of weeks.
“We would also encourage anyone who is affected by this news to please seek support.”
In 2019, an author claimed Fred’s wife Rose West helped her future husband abduct Mary who disappeared at a bus stop on the way to see her boyfriend.
Rose’s former solicitor Leo Goatley wrote in a book his former client was an accomplice in the waitress’s murder.
A silver locket on a chain, which the family believes belonged to Mary, was also found by police at the Fred’s home, 25 Cromwell Street.
The home - dubbed the ‘House of Horrors’ - is half a mile from the cafe on Southgate Street being searched today.
Fred was a regular customer at the cafe – then known as The Pop In - when Mary vanished.
The builder is also said to have laid a concrete floor in the basement of the eatery a month before Mary went missing.
Mr Goatley claimed Rose, then 14, visited Fred’s caravan in Bishop’s Cleeve along with other wayward teens.
He said: “One other piece of speculative evidence that points to Mary Bastholm being brought to Bishop’s Cleeve that appeared in reports was that of a watch found on Tobyfield Road which may have belonged to her.”
But Mr Goatley writes that when he first mentioned Mary’s name to his then client she was taken aback and simply said: “No, I wouldn’t know would I. That was before I was on the scene.”
Mary’s parents, Doreen and Christian, both died some time ago without ever hearing their daughter’s fate.
Fred West allegedly admitted killing Mary to his son Stephen and to his appropriate adult Janet Leach but in official interviews denied ever being involved.
Mary’s family and friends have campaigned in vain for years for police to search the cafe for her remains.
But a cadaver dog recently taken to the site by a TV documentary team is said to have shown a positive reaction in the basement.
In addition, ground penetrating radar is said to have shown up a suspicious image below the concrete surface.
The TV team contacted Gloucestershire Police with their findings and a full search of the basement area under the guidance of an archaeologist was launched this morning.
Along with his wife, Fred West tortured, raped and murdered an unknown number of women over a 20-year period.
Rose was convicted of 10 murders in November 1995 and is serving life.
Fred was charged with 12 murders, but committed suicide in a Birmingham prison before his trial.