Donald Campbell's legendary Bluebird K7 boat is to be given to the Lake District museum where she will go on display - rebuilt to her famed 1967 appearance.

The record breaker's daughter, Gina Campbell, made the announcement yesterday (Thursday) as the Ruskin Museum, in Coniston, launched a fund-raising appeal for £450,000 towards the cost of extending the building and creating an exciting display around the boat.

Bluebird's rebuild has also begun, with a team of volunteers being led by Bill Smith, the diver and engineer who recovered the boat and Campbell's body from Coniston Water in 2001.

The development ends a period of uncertainty for the famous boat following her recovery. The Heritage Lottery Fund had twice turned down the rebuild project for funding, prompting an outcry from supporters.

Miss Campbell announced yesterday that the family trust which owns the boat had agreed to donate her to the museum, on the understanding that she was rebuilt to her January 1967 condition, when the speed ace died in an accident on the lake trying to better his own world water speed record.

The agreement will be finalised on January 4 next year, which will be the 40th anniversary of the crash.

As well as the dedicated volunteers, a number of expert firms have carried out work free of charge, which makes it difficult to estimate the cost of the rebuild.

However, Mr Smith is grateful for donations, and is also selling commemorative items from the project website - www.bluebirdproject.com - to raise funds.