A DERELICT and contaminated Lancaster eyesore is to be transformed into an 'urban village' as part of a multi-million pound revamp.

The Luneside East site on the banks of the River Lune is largely derelict.

But the reclamation and redevelopment of the land has been announced as Lancaster City Council's main regeneration priority.

Ambitious plans will mean the end of the road for the landmark' gas holder which has stood on the river bank for more than a century.

It will be demolished as the land is prepared for around 350 new homes in a 'village' also boasting shops, cafes, bars, an hotel and new office space.

The city has won funding from regeneration specialists inluding English Partnerships, the Northwest Regional Development Agency and the European Regional Development Fund to buy the land.

And following a competition earlier this year, it has now formally contracted with developers CTP Ltd and Development Securities plc to begin work there.

They will clean up the site - much of which has been contaminated by past industrial use - and co-ordinate the development. It is hoped that work will begin late next year.

A public inquiry into plans for the site will be held in January if objections to the redevelopment are not withdrawn.

Cllr Abbott Bryning says: "The city council and its partners are on course to making a real difference to this neglected and worn out area of our industrial past.

"The ambition is to transform it into an imaginative mixed development of an urban village with modern commercial facilities, a park and open spaces with an attractive waterfront.

"The whole scheme will complement the improved quayside with links through to the castle priory precinct and city centre. It will provide jobs, homes, enterprise and devolved public space."