LANCASTER is to spearhead a £10 million project to transform an eyesore industrial site into a 21st Century urban village.

The major regeneration of Luneside East', at the far end of St George's Quay, just west of Carlisle Bridge, is the flagship project for the Lancaster Economic Development Zone.

Cash from English Partnerships, the Northwest Development Agency and the European Regional Development Fund is funding the project.

And the city council says that once the site has been cleared, it will be sold to a developer to build a mixed-use urban neighbourhood', with both new housing, shops and industry that will provide the city with a landmark.

Ian Whittaker, NWDA area manager for Lancashire, says: "Once in a while, an opportunity comes along to make a real and lasting impact in a special way.

"The agency is pleased to support this impressive development which will tackle a difficult brownfield site on Lancaster's quayside.

"I am confident that Luneside East has the potential to become a real jewel in the crown for the city of Lancaster and for the North West as a whole," he adds.

The project could take until 2009 to complete and the council believes one of the major tasks will be to support existing businesses at the site who will need temporary premises.