I have a 2004 Chevrolet Avalanche with the tow package ,would it be alright to use 245/70r16 tire instead of 265/70r16?
If you think your Avalanche is getting okay mileage now (most likely between 15-18 highway), you're going to hurt it worse by using those tires. The ones you want to use are shorter overall. Secondly, since they are skinnier tires, by two centimeters, you won't have as much grip and possibly stability as you do now. The speedometer will be off by a bit, reading faster than you're actually going.
You can use them, but there's some large tradeoffs for doing so. Personally, it's not something I'd do.